Question 1

If a company purchases equipment for cash:

Accepted Answer

A)  Assets will increase and owners' equity will also increase. 
B)  Assets will increase and owners' equity will decrease. 
C)  Assets will increase and owners' equity will remain unchanged. 
D)  Total assets and owners' equity will remain unchanged. 
A)  Assets will increase and owners' equity will also increase. 
B)  Assets will increase and owners' equity will decrease. 
C)  Assets will increase and owners' equity will remain unchanged. 
D)  Total assets and owners' equity will remain unchanged.

Question 2

The purchase of office equipment at a cost of $7,600 with an immediate payment of $4,200 and agreement to pay the balance within 60 days is recorded by:

Accepted Answer

A)  A debit of $7,600 to Office Equipment, a debit of $4,200 to Accounts Receivable, and a credit of $3,400 to Accounts Payable. 
B)  A debit of $7,600 to Office Equipment, a credit of $4,200 to Cash, and a credit of $3,400 to Accounts Receivable. 
C)  A debit of $3,400 to Accounts Receivable, a debit of $4,200 to Cash, and a credit of $7,600 to Office Equipment. 
D)  A debit of $7,600 to Office Equipment, a credit of $4,200 to Cash, and a credit of $3,400 to Accounts Payable. 
A)  A debit of $7,600 to Office Equipment, a debit of $4,200 to Accounts Receivable, and a credit of $3,400 to Accounts Payable. 
B)  A debit of $7,600 to Office Equipment, a credit of $4,200 to Cash, and a credit of $3,400 to Accounts Receivable. 
C)  A debit of $3,400 to Accounts Receivable, a debit of $4,200 to Cash, and a credit of $7,600 to Office Equipment. 
D)  A debit of $7,600 to Office Equipment, a credit of $4,200 to Cash, and a credit of $3,400 to Accounts Payable.

Question 3

On June 4, the balance in the Capital Stock account is:

Accepted Answer

A)  $86,400. 
B)  $97,600. 
C)  $94,000. 
D)  Some other amount. 
A)  $86,400. 
B)  $97,600. 
C)  $94,000. 
D)  Some other amount.

Question 4

Revenues increase owners' equity and are, therefore, recorded by crediting the revenues account.

Accepted Answer

A) True 
 B)False

Question 5

A journal entry to recognize an expense must include:

Accepted Answer

A)  A credit to Accounts Payable. 
B)  A credit to an expense account. 
C)  A credit to Cash. 
D)  A debit to an expense account. 
A)  A credit to Accounts Payable. 
B)  A credit to an expense account. 
C)  A credit to Cash. 
D)  A debit to an expense account.

Question 6

Given the following list of accounts and their amounts for Hayden's Co. in alphabetical order, prepare a trial balance for December 31, 2009 as it should be presented.
 $$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & 5,000 \
\hline \text { Accounts Receivable } & 3,000 \
\hline \text { Advertising expense } & 400 \
\hline \text { Building } & 18,000 \
\hline \text { Capital stock } & 14,100 \
\hline \text { Cash } & 6,500 \
\hline \text { Dividends } & 1,600 \
\hline \text { Land } & 26,000 \
\hline \text { Notes Payable } & 15,000 \
\hline \text { Revenue } & 31,000 \
\hline \text { Retained Earnings } & ? \
\hline \text { Supplies } & 700 \
\hline \text { Utilities expense } & 900 \
\hline \text { Wage expense } & 13,250 \
\hline \text { Wages Payable } & 3,050 \
\hline
\end{array}$$

Accepted Answer

The answer of Given the following list of accounts and...

Question 7

A journal entry to recognize an expense could include each of the following, except:

Accepted Answer

A)  A debit to an expense account. 
B)  A credit to Accounts Payable. 
C)  A debit to a liability account. 
D)  A credit to Cash. 
A)  A debit to an expense account. 
B)  A credit to Accounts Payable. 
C)  A debit to a liability account. 
D)  A credit to Cash.

Question 8

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits recorded, but the number of debit and credit entries may differ.

Accepted Answer

A) True 
 B)False

Question 9

The process of originally recording a business transaction in the accounting records is termed:

Accepted Answer

A)  Journalizing. 
B)  Footing. 
C)  Posting. 
D)  Balancing. 
A)  Journalizing. 
B)  Footing. 
C)  Posting. 
D)  Balancing.

Question 10

"I was just following orders" is an acceptable defense if you committed an unethical action during an audit.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following accounts normally has a debit balance?

Accepted Answer

A)  Accounts payable. 
B)  Retained earnings. 
C)  Accounts receivable. 
D)  Service revenue. 
A)  Accounts payable. 
B)  Retained earnings. 
C)  Accounts receivable. 
D)  Service revenue.

Question 12

On January 3, 2012, total liabilities are:

Accepted Answer

A)  $185,000. 
B)  $165,000. 
C)  $150,000. 
D)  $70,000. 
A)  $185,000. 
B)  $165,000. 
C)  $150,000. 
D)  $70,000.

Question 13

Every transaction affects equal numbers of ledger accounts and is recorded by equal dollar amounts of debits and credits.

Accepted Answer

A) True 
 B)False

Question 14

Double-entry accounting
The accounting system of most businesses, whether manual or computer-based, is some form of a double-entry system of accounting.
(A.) What is meant by the term "double-entry accounting"?
(B.) Explain how the double-entry system is applied in accounting for the following transaction:
Majestic Company purchases a piece of equipment costing $6,000, paying $3,000 cash with the balance of the purchase price to be paid within 60 days.

Accepted Answer

(A.) The phrase "double-entry" refers to

Question 15

In a trial balance prepared on January 5, 2009, the total of the credit column is:

Accepted Answer

A)  $275,000. 
B)  $286,000. 
C)  $287,000. 
D)  $297,000. 
A)  $275,000. 
B)  $286,000. 
C)  $287,000. 
D)  $297,000.

Question 16

Revenues increase owners' equity because:

Accepted Answer

A)  Revenues increase net income which increases retained earnings. 
B)  Revenues are recorded by a credit. 
C)  Of the matching principle. 
D)  The realization principle requires revenues be recognized with an increase to owners' equity. 
A)  Revenues increase net income which increases retained earnings. 
B)  Revenues are recorded by a credit. 
C)  Of the matching principle. 
D)  The realization principle requires revenues be recognized with an increase to owners' equity.

Question 17

Which of the following accounts normally has a credit balance?

Accepted Answer

A)  Cash. 
B)  Service revenue. 
C)  Accounts receivable. 
D)  Utilities expense. 
A)  Cash. 
B)  Service revenue. 
C)  Accounts receivable. 
D)  Utilities expense.

Question 18

Bruno's Pizza Restaurant makes full payment of $8,300 on an account payable to Stella's Cheese Co. Stella's would record this transaction with a:

Accepted Answer

A)  Debit to Accounts Payable for $8,300. 
B)  Credit to Cash for $8,300. 
C)  Credit to Accounts Receivable for $8,300. 
D)  Credit to Accounts Payable for $8,300. 
A)  Debit to Accounts Payable for $8,300. 
B)  Credit to Cash for $8,300. 
C)  Credit to Accounts Receivable for $8,300. 
D)  Credit to Accounts Payable for $8,300.

Question 19

Ben Dryden, president of Jet Glass, Inc, noticed a $8,000 debit to Accounts Payable in the company's general ledger. This debit could correspond to:

Accepted Answer

A)  A $8,000 sale to a customer. 
B)  A purchase of equipment costing $8,000 on credit. 
C)  A payment of $8,000 to a supplier to settle a balance due. 
D)  The failure to pay this month's $8,000 utility bill on time. 
A)  A $8,000 sale to a customer. 
B)  A purchase of equipment costing $8,000 on credit. 
C)  A payment of $8,000 to a supplier to settle a balance due. 
D)  The failure to pay this month's $8,000 utility bill on time.

Question 20

On January 5, 2012, total liabilities are:

Accepted Answer

A)  $0. 
B)  $579,000. 
C)  $1,399,000. 
D)  $1,721,000. 
A)  $0. 
B)  $579,000. 
C)  $1,399,000. 
D)  $1,721,000.

Exam 3: The Accounting Cycle: Capturing Economic Events

If a company purchases equipment for cash:

The purchase of office equipment at a cost of $7,600 with an immediate payment of $4,200 and agreement to pay the balance within 60 days is recorded by:

On June 4, the balance in the Capital Stock account is:

Revenues increase owners' equity and are, therefore, recorded by crediting the revenues account.

A journal entry to recognize an expense must include:

A journal entry to recognize an expense could include each of the following, except:

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits recorded, but the number of debit and credit entries may differ.

The process of originally recording a business transaction in the accounting records is termed:

"I was just following orders" is an acceptable defense if you committed an unethical action during an audit.

Which of the following accounts normally has a debit balance?

On January 3, 2012, total liabilities are:

Every transaction affects equal numbers of ledger accounts and is recorded by equal dollar amounts of debits and credits.

In a trial balance prepared on January 5, 2009, the total of the credit column is:

Revenues increase owners' equity because:

Which of the following accounts normally has a credit balance?

Bruno's Pizza Restaurant makes full payment of $8,300 on an account payable to Stella's Cheese Co. Stella's would record this transaction with a:

Ben Dryden, president of Jet Glass, Inc, noticed a $8,000 debit to Accounts Payable in the company's general ledger. This debit could correspond to:

On January 5, 2012, total liabilities are:

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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