Exam 3: The Double-Entry Accounting System

Natalie Preston had the following transactions for Preston Business Services for 2016. 1)Provided services on account,$30,000. 2)Purchased $7,500 of office supplies on account. 3)At the end of the year,an adjusting entry was prepared for the supplies that had been used.The amount of office supplies still on hand was $750. Required: a)Show the effect of the above three events on the accounting equation.(You need to fill in the appropriate headings). b)Set up the appropriate T-accounts and post each of the above transactions. c)What is the amount of total assets at the end of 2016? What is the amount of net income for 2016?

Indicate whether each of the following statements is true or false.If a company made the following journal entry, this entry would cause: _____ a)Cash to decrease. _____ b)Total assets to decrease. _____ c)Liabilities to decrease. _____ d)Cash flows from operating activities to increase. _____ e)Net income to decrease.

Which of the following is decreased with a debit?

Which of the following errors would cause the debit side of a trial balance to be larger than the credit side?

Indicate whether each of the following statements is true or false.If a company made the following journal entry, this entry would cause: _____ a)net income to decrease. _____ b)total assets to decrease. _____ c)liabilities to stay the same. _____ d)cash flows from investing activities to decrease. _____ e)owners' equity to decrease.

Benson Co.purchased land and paid the full purchase price in cash.The journal entry necessary to record this event includes a:

The three primary asset use transactions are incurring expenses,accruing liabilities,and paying dividends.

Which of the following statements is true?

Which one of the following would not be included in a closing entry at the end of the accounting year?

On November 1,2016,Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months.Assuming that Schumacher recorded this purchase as an asset,the adjusting entry required on December 31,2016 would include:

The following is a random list of the accounts of Wyoming Company: If these accounts were presented in a trial balance,the total of the credit column would be equal to:

A trial balance can be in balance,even if there are errors in the accounting system.

On August 1,2016,Billias Company issued a $10,000 6%,1-year note to Citizens Bank.Which of the following entries reflects the end of the year adjustment to record the expense incurred?

The entry to record revenue earned on account includes a debit to accounts receivable and a credit to revenue.

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts. -A transaction recorded as a debit to Cash and a credit to Common Stock.

If a $200 credit to Interest Payable was instead recorded in error as a $200 credit to Cash:

The following is a trial balance of Barnhart Company as December 31,2016: Based on the trial balance,the total amount of assets appearing on the balance sheet would be:

Record the general journal entries for the following transactions for Stuart Corporation for 2016. 1)Performed services for $26,000 cash. 2)Purchased $800 of office supplies on account. 3)Purchased land for $95,000 cash. 4)Paid salary expense of $16,500. 5)Paid for $600 of the supplies purchased in event 2. 6)Collected $15,000 in advance for services to be provided over the next 12 months. 7)Recognized $10,000 of revenue on the contract from event 6. 8)Accrued $5,500 of salary expense.

Indicate how each event affects the elements of financial statements.Use the following letters to record your answer in the box shown below each element.You do not need to enter amounts. -An adjusting entry recorded as a debit to Depreciation Expense and a credit to Accumulated Depreciation.

What effect do debits have on asset accounts? On liability accounts?