Exam 2: The Accounting Information System

For each transaction provided, choose the appropriate account from the list that would receive a debit entry as a result of the transaction. (Choices may be used more than once.) a.Cash b.Accounts receivable c.Supplies d.Prepaid insurance e.Land f.Equipment g.Accounts payable h.Unearned revenues i.Notes payable j.Common stock k.Retained earnings l.Service revenue m.Salary expense n.Insurance expense o.Utilities expense p.Dividends -Providing services to customers for credit

The process of transferring amounts from the book of original entry into specific account records is referred to as

Hypnosis Institute received payments from customers who had been billed earlier for services provided. What effect does this transaction have on the accounting equation?

When preparing the financial statements, the accountant must estimate the balances of certain accounts. When two possible estimates are available and when these estimates are about equally likely, the accountant's prudent reaction is to select the least optimistic estimate in terms of the recorded amounts of assets or income statement accounts. This is referred to as the principle of ____________________.

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Purchasing a building for cash

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) a.External event to be recorded as a transaction b.Internal event to be recorded as a transaction c.Event which should not be recognized in the accounting system -Amounts collected from cash and credit customers is deposited in the company's bank account.

The principle of conservatism is concerned with

For each transaction provided, choose the appropriate account from the list that would receive a debit entry as a result of the transaction. (Choices may be used more than once.) a.Cash b.Accounts receivable c.Supplies d.Prepaid insurance e.Land f.Equipment g.Accounts payable h.Unearned revenues i.Notes payable j.Common stock k.Retained earnings l.Service revenue m.Salary expense n.Insurance expense o.Utilities expense p.Dividends -Paying dividends

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) a.Debit b.Credit -Service Revenues

Selected accounts at July 31 are provided below: -Refer to Hesson Properties. How much is still owed to the company by its customers at the end of the month?

Borrowing from the bank in order to acquire computer equipment for $1,500 has the effect of increasing both assets and ____________________.

-The T-accounts presented below are taken from the general ledger of Health Force Corporation on March 31, 2013. Determine the balance of each account and present them in proper trial balance format.

Selected accounts at July 31 are provided below: -Refer to HVAC Service. Based on these transactions, what is the total amount of expense that should be reported on the company's income statement for the month?

What is conservatism and why is it important in accounting?

The two-column record used to accumulate monetary increases and decreases for individual assets, liabilities, stockholders' equity, revenue, expense, and dividends items is a(n)

Selected accounts at July 31 are provided below: -Refer to Happy Heights Country Club. On which date did the country club sell a club membership for cash?

The general ledger is often used for the initial recording of repetitive transactions.

The dividends account has a normal debit balance.

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Paying for a previous purchase on credit

-Refer to Hatcher Tool Service. Indicate the economic effects of each transaction above on the accounting equation. Use the following format for your answers. Show the dollar amounts in the appropriate columns and use a plus (+)sign to indicate an increase and a minus (-)sign to indicate a decrease.