Question 1

Which of the following describes the classification and normal balance of the Retained Earnings account?

Accepted Answer

A)  Asset, debit 
B)  Stockholders' equity, credit 
C)  Revenues, credit 
D)  Expense, debit 
A)  Asset, debit 
B)  Stockholders' equity, credit 
C)  Revenues, credit 
D)  Expense, debit

Question 2

The classification and normal balance of the Dividends account is

Accepted Answer

A)  revenue with a credit balance. 
B)  an expense with a debit balance. 
C)  a liability with a credit balance. 
D)  stockholders' equity with a debit balance. 
A)  revenue with a credit balance. 
B)  an expense with a debit balance. 
C)  a liability with a credit balance. 
D)  stockholders' equity with a debit balance.

Question 3

Equipment costing $20,000 machine is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

Accepted Answer

A)  credit to Notes Payable. 
B)  debit to Cash. 
C)  credit to Notes Receivable. 
D)  credit to Equipment. 
A)  credit to Notes Payable. 
B)  debit to Cash. 
C)  credit to Notes Receivable. 
D)  credit to Equipment.

Question 4

If a company pays dividends of $10,000,

Accepted Answer

A)  stockholders' equity will be reduced by $10,000. 
B)  net income will be reduced by $10,000. 
C)  retained earnings will be reduced by $10,000. 
D)  Both retained earnings and stockholders' equity will be reduced by $10,000. 
A)  stockholders' equity will be reduced by $10,000. 
B)  net income will be reduced by $10,000. 
C)  retained earnings will be reduced by $10,000. 
D)  Both retained earnings and stockholders' equity will be reduced by $10,000.

Question 5

Posting

Accepted Answer

A)  transfers ledger transaction data to the journal. 
B)  normally occurs before journalizing. 
C)  accumulates the effects of journalized transactions in the individual accounts. 
D)  enters transaction data in the journal. 
A)  transfers ledger transaction data to the journal. 
B)  normally occurs before journalizing. 
C)  accumulates the effects of journalized transactions in the individual accounts. 
D)  enters transaction data in the journal.

Question 6

Which of the following accounts is increased with a credit?

Accepted Answer

A)  Supplies Expense 
B)  Supplies 
C)  Sales Revenue 
D)  Dividends 
A)  Supplies Expense 
B)  Supplies 
C)  Sales Revenue 
D)  Dividends

Question 7

The accountant for Mega Stores, Inc. should have recorded the following correct entry: Jan. 15 Notes Receivable 243
Equipment 243
Instead, he misunderstood the transaction and recorded an incorrect entry. Which of the following wrong entries pertaining to this transaction could have been detected as erroneous when using a trial balance?

Accepted Answer

A) $$\begin{array} { c c c } 
\text { Jan } 15 & \text { Notes Payable }&243 \
&\text { Cash } & 243 \
\end{array}$$ 
B) $$\begin{array}{l}
\text { Jan } 15 & \text { Notes Receivable } \quad 234\
&\text { Equipment } \quad 234
\end{array}$$ 
C) Jan 15$\quad$Equipment$\quad$243
$\quad$Notes Receivable$\quad$243 
D) Jan 15$\quad$ Notes Receivable$\quad$243
$\quad$Equipment$\quad$234 
A) $$\begin{array} { c c c } 
\text { Jan } 15 & \text { Notes Payable }&243 \
&\text { Cash } & 243 \
\end{array}$$ 
B) $$\begin{array}{l}
\text { Jan } 15 & \text { Notes Receivable } \quad 234\
&\text { Equipment } \quad 234
\end{array}$$ 
C) Jan 15$\quad$Equipment$\quad$243
$\quad$Notes Receivable$\quad$243 
D) Jan 15$\quad$ Notes Receivable$\quad$243
$\quad$Equipment$\quad$234

Question 8

This information relates to Hanshew Real Estate Agency.
Oct. 1 Stockholders invested $35,000 in exchange for common stock of the corporation.
2 Hires an administrative assistant at an annual salary of $36,000.
3 Buys equipment for $3,500 on account.
6 Sells a house and lot for M Springer; commissions due from Springer, $10,000 (not paid by Springer at this time).
10 Receives cash of $140 as commission for acting as rental agent renting an apartment.
27 Pays $700 on account for the equipment purchased on October 3.
30 Pays the administrative assistant $3,000 in salary for October.
Instructions
(a) Journalize the transactions. Do not provide explanations.
(b) Post the transactions to T accounts.

Accepted Answer

The answer of This information relates to Hanshew Real Estate...

Question 9

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $900. The Cash account has a

Accepted Answer

A)  $900 credit balance. 
B)  $300 debit balance. 
C)  $1,200 debit balance. 
D)  $300 credit balance. 
A)  $900 credit balance. 
B)  $300 debit balance. 
C)  $1,200 debit balance. 
D)  $300 credit balance.

Question 10

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

Accepted Answer

A) True 
 B)False

Question 11

A general ledger should be arranged in financial statement order beginning with the balance sheet accounts.

Accepted Answer

A) True 
 B)False

Question 12

When a corporation distributes a dividend the

Accepted Answer

A)  most common form of distribution is a cash dividend. 
B)  Dividends account will be increased with a credit. 
C)  Retained Earnings account will be directly increased with a debit. 
D)  Dividends account will be decreased with a debit. 
A)  most common form of distribution is a cash dividend. 
B)  Dividends account will be increased with a credit. 
C)  Retained Earnings account will be directly increased with a debit. 
D)  Dividends account will be decreased with a debit.

Question 13

The Cash account has a credit balance. Which statement is true?

Accepted Answer

A)  This is the normal balance for cash. 
B)  An error has occurred and must be corrected before financial statements can be prepared. 
C)  The account needs to be analyzed to determine the reason for the credit balance. 
D)  Debit postings exceed the credit postings for the accounting period. 
A)  This is the normal balance for cash. 
B)  An error has occurred and must be corrected before financial statements can be prepared. 
C)  The account needs to be analyzed to determine the reason for the credit balance. 
D)  Debit postings exceed the credit postings for the accounting period.

Question 14

Crawford Company started the year with $30,000 in its Common Stock account and a credit balance in Retained Earnings of $22,000. During the year, the company earned net income of $24,000 and declared and paid $10,000 of dividends. In addition, the company sold additional common stock amounting to $14,000. As a result, the amount of its retained earnings at the end of the year would be

Accepted Answer

A)  $80,000. 
B)  $36,000. 
C)  $66,000. 
D)  $50,000. 
A)  $80,000. 
B)  $36,000. 
C)  $66,000. 
D)  $50,000.

Question 15

The first step in the recording process is to

Accepted Answer

A)  prepare financial statements. 
B)  analyze the transaction in terms of its effect on the accounts. 
C)  post to a journal. 
D)  prepare a trial balance. 
A)  prepare financial statements. 
B)  analyze the transaction in terms of its effect on the accounts. 
C)  post to a journal. 
D)  prepare a trial balance.

Question 16

If services are rendered for cash, then

Accepted Answer

A)  assets will increase. 
B)  liabilities will increase. 
C)  stockholders' equity will decrease. 
D)  liabilities will decrease. 
A)  assets will increase. 
B)  liabilities will increase. 
C)  stockholders' equity will decrease. 
D)  liabilities will decrease.

Question 17

Courtney Company purchased equipment for $1,800 cash. As a result of this event,

Accepted Answer

A)  equity decreased by $1,800. 
B)  assets increased by $1,800. 
C)  total assets remained unchanged. 
D)  Both assets and equity decreased by $1,800. 
A)  equity decreased by $1,800. 
B)  assets increased by $1,800. 
C)  total assets remained unchanged. 
D)  Both assets and equity decreased by $1,800.

Question 18

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

Accepted Answer

A)  Asset, debit 
B)  Liability, credit 
C)  Revenues, credit 
D)  Expense, debit 
A)  Asset, debit 
B)  Liability, credit 
C)  Revenues, credit 
D)  Expense, debit

Question 19

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (-).

Accepted Answer

The answer of For each of the following accounts indicate...

Question 20

Sara Obermeyer decides to open a pizza parlor near the local college campus that will operate as a corporation. Analyze the following transactions for the month of June in terms of their effect on the basic accounting equation. Record each transaction by increasing (+) or decreasing (-) the dollar amount of each item affected. Indicate the new balance of each item after a transaction is recorded. It is not necessary to identify the cause of changes in stockholders' equity.
Transactions
(1) Sara Obermeyer invests $25,000 cash in exchange for common stock to start a pizza parlor business on June 1.
(2) Purchased equipment for $4,000 paying $2,000 in cash and the remainder due in 30 days.
(3) Purchased supplies for $1,200 cash.
(4) Received a bill from Campus News for $200 for advertising in the campus newspaper.
(5) Cash receipts from customers for pizza sales amounted to $1,500.
(6) Paid salaries of $200 to student workers.
(7) Billed the Tiger Football Team $300 for pizzas ordered.
(8) Paid $200 to Campus News for advertising that was previously billed in Transaction 4.
(9) Sara Obermeyer was paid dividends of $1,200.
(10) Incurred utility expenses for month on account, $100.

Accepted Answer

The answer of Sara Obermeyer decides to open a pizza...

Which of the following describes the classification and normal balance of the Retained Earnings account?

The classification and normal balance of the Dividends account is

Equipment costing $20,000 machine is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

If a company pays dividends of $10,000,

Posting

Which of the following accounts is increased with a credit?

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $900. The Cash account has a

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

A general ledger should be arranged in financial statement order beginning with the balance sheet accounts.

When a corporation distributes a dividend the

The Cash account has a credit balance. Which statement is true?

The first step in the recording process is to

If services are rendered for cash, then

Courtney Company purchased equipment for $1,800 cash. As a result of this event,

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (-).

Introduction to Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

Exam 3: The Accounting Information System

Which of the following describes the classification and normal balance of the Retained Earnings account?

The classification and normal balance of the Dividends account is

Equipment costing $20,000 machine is purchased by paying $5,000 cash and signing a note payable for the remainder. The journal entry should include a

If a company pays dividends of $10,000,

Posting

Which of the following accounts is increased with a credit?

In the first month of operations, the total of the debit entries to the Cash account amounted to $1,200 and the total of the credit entries to the Cash account amounted to $900. The Cash account has a

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

A general ledger should be arranged in financial statement order beginning with the balance sheet accounts.

When a corporation distributes a dividend the

The Cash account has a credit balance. Which statement is true?

The first step in the recording process is to

If services are rendered for cash, then

Courtney Company purchased equipment for $1,800 cash. As a result of this event,

Which of the following describes the classification and normal balance of the Unearned Rent Revenue account?

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (-).

Introduction to Financial Statements

A Further Look at Financial Statements

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters