Question 1

Performing services on account:

Accepted Answer

A) decreases both assets and liabilities. 
B) increases assets and decreases stockholders' equity. 
C) decreases revenues and decreases stockholders' equity. 
D) increases both net income and stockholders' equity.

Question 2

The Diamond Store began business on June 1. During the month of June, Diamond had cash payments of $11,000. At the end of June, it had a $23,000 cash balance. Based on this information, the cash receipts for the month of June were:

Accepted Answer

A) $12,000. 
B) $23,000. 
C) $34,000. 
D) $45,000.

Question 3

A company received a utility bill for $1000 and decided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation?

Accepted Answer

A) Add $1000 to Utilities Expense and add $1000 to Cash. 
B) Subtract $1000 from Cash and add $1000 to Accounts Payable. 
C) Add $1000 to Accounts Receivable and subtract $1000 from Retained Earnings. 
D) Add $1000 to Accounts Payable and subtract $1000 from Retained Earnings.

Question 4

The purchase of office computers for cash includes a debit to:

Accepted Answer

A) Cash and a credit to Office Equipment. 
B) Office Equipment and a credit to Accounts Payable. 
C) Accounts Receivable and credit to Office Equipment. 
D) Office Equipment and a credit to Cash.

Question 5

The process of copying the information from the journal to the trial balance is:

Accepted Answer

A) called posting. 
B) not undertaken. 
C) called journalizing. 
D) used to prepare the financial statements.

Question 6

Transactions provide objective information about the financial impact of an exchange on an entity.

Accepted Answer

A) True 
 B)False

Question 7

Prepare the journal entry for the following transaction:
On 6/12/17, the business paid $4,500 for the following expenses: employee salary, $3,000; utilities, $1,000, and repairs, $500.

Accepted Answer

The answer of Prepare the journal entry for the following...

Question 8

Each transaction has either an equal effect on both the left- and right-sides of the accounting equation, or an offsetting effect (both positive and negative)on the same side of the equation.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements, regarding the rules of debits and credits, is CORRECT?

Accepted Answer

A) An asset is increased by a credit. 
B) Dividends are decreased by debits. 
C) A liability is increased by a debit. 
D) Revenue is increased by a credit.

Question 10

Which transaction increases stockholders' equity?

Accepted Answer

A) sale of common stock 
B) dividends that are declared and paid 
C) expenses greater than revenues for the period 
D) payment of operating expenses

Question 11

A prepaid expense is an asset.

Accepted Answer

A) True 
 B)False

Question 12

On March 31, Baker Company received a bill and paid for advertising costs for the current month. This payment results in a:

Accepted Answer

A) debit to Cash. 
B) debit to Prepaid Advertising. 
C) debit to Advertising Expense. 
D) credit to Advertising Revenue.

Question 13

The dollar amounts listed on the trial balance are obtained from the:

Accepted Answer

A) beginning balances in the ledger accounts. 
B) ending balances in the ledger accounts. 
C) last period's balance sheet and income statement. 
D) this period's balance sheet and income statement.

Question 14

When computing the normal balance of an account:

Accepted Answer

A) salaries expense should have a credit balance. 
B) accounts payable should have a credit balance. 
C) equipment should have a credit balance. 
D) notes payable should have a debit balance.

Question 15

On May 1, a business provided legal services to a client and billed the client $3700. The client promised to pay the business in one month. Which journal entry should the business record on May 1?

Accepted Answer

A) Debit Cash for $3700 and credit Service Revenue for $3700. 
B) Debit Cash for $3700 and credit Retained Earnings for $3700. 
C) Debit Accounts Receivable for $3700 and credit Service Revenue for $3700. 
D) Debit Accounts Payable for $3700 and credit Service Revenue for $3700.

Question 16

Assets, revenues, and dividends are all increased with debits.

Accepted Answer

A) True 
 B)False

Question 17

Latinovich Legal Services had the following transactions during its first month of operations:
May 1 Latinovich Legal Services received $20,000 cash and issued common stock to the stockholders.
May 1 Paid the May rent, $5,000.
May 3 Purchased equipment on account for $3,000.
May 5 Purchased supplies for $2,000 on account.
May 8 Performed services for a client and received cash of $11,800.
May 12 Performed services for a client and billed the client $12,200. The client promised to pay within 10 days.
May 15 Paid for the equipment purchased May 3 on account.
May 22 Received payment from a client on account, $12,200.
May 28 Borrowed $10,000, by signing a promissory note, from First National Bank for use in the business.
May 31 Employees were paid $3,000 for working during the current month.
May 31 Received and paid the utility bill of $1,800.
Required: Record the transactions of the business in a journal. Include an explanation for each entry.

Accepted Answer

The answer of Latinovich Legal Services had the following transactions...

Question 18

Which of the following transactions will increase one asset and decrease another asset?

Accepted Answer

A) the purchase of office supplies on account 
B) the performance of services on account 
C) the purchase of equipment for cash 
D) the performance of services for cash

Question 19

A company receives an utility bill and immediately pays it. With this transaction:

Accepted Answer

A) stockholders' equity is decreased. 
B) expenses are decreased. 
C) assets are increased. 
D) liabilities are increased.

Question 20

A company performed tax services for a client on account. The amount billed to the client was $22,000. How does this transaction affect the accounting equation?

Accepted Answer

A) Add $22,000 to Cash and add $22,000 to Service Revenue. 
B) Add $22,000 to Cash and add $22,000 to Retained Earnings. 
C) Add $22,000 to Accounts Receivable and add $22,000 to Retained Earnings. 
D) Add $22,000 to Accounts Payable and add $22,000 to Service Revenue.

Exam 2: Transaction Analysis

Performing services on account:

The Diamond Store began business on June 1. During the month of June, Diamond had cash payments of $11,000. At the end of June, it had a $23,000 cash balance. Based on this information, the cash receipts for the month of June were:

A company received a utility bill for $1000 and decided to pay it next month due to a shortage of cash. How does this transaction affect the accounting equation?

The purchase of office computers for cash includes a debit to:

The process of copying the information from the journal to the trial balance is:

Transactions provide objective information about the financial impact of an exchange on an entity.

Prepare the journal entry for the following transaction: On 6/12/17, the business paid $4,500 for the following expenses: employee salary, $3,000; utilities, $1,000, and repairs, $500.

Each transaction has either an equal effect on both the left- and right-sides of the accounting equation, or an offsetting effect (both positive and negative)on the same side of the equation.

Which of the following statements, regarding the rules of debits and credits, is CORRECT?

Which transaction increases stockholders' equity?

A prepaid expense is an asset.

On March 31, Baker Company received a bill and paid for advertising costs for the current month. This payment results in a:

The dollar amounts listed on the trial balance are obtained from the:

When computing the normal balance of an account:

On May 1, a business provided legal services to a client and billed the client $3700. The client promised to pay the business in one month. Which journal entry should the business record on May 1?

Assets, revenues, and dividends are all increased with debits.

Which of the following transactions will increase one asset and decrease another asset?

A company receives an utility bill and immediately pays it. With this transaction:

A company performed tax services for a client on account. The amount billed to the client was $22,000. How does this transaction affect the accounting equation?