Exam 3: The Double-Entry Accounting System

Indicate whether each of the following statements is true or false. _____ a) In an accrual accounting system, a debit entry to Cash is never accompanied by a credit entry to Revenue. _____ b) The adjustment for accrued salaries would involve a debit to Salaries Expense and a credit to Salaries Payable. _____ c) Adjusting entries will always include either a debit to an expense account or a credit to a revenue account. _____ d) The closing entry for an expense involves a debit to the expense and a credit to Retained Earnings. _____ e) The closing entry for a revenue involves a debit to the revenue and a credit to Retained Earnings.

Wilson Company began the accounting period with a $16,000 debit balance in its accounts receivable account. During the accounting period, the company recorded revenue on account amounting to $44,000. The accounts receivable account at the end of the accounting period contained a $8,000 debit balance. Based on this information, the cash collected from accounts receivable during the period is

Indicate whether each of the following statements is true or false. _____ a) An asset source transaction may involve a debit to an asset and a credit to equity. _____ b) An asset use transaction may involve a credit to an asset and a debit to a liability. _____ c) A credit to the common stock account would be included in an asset use transaction. _____ d) The payment of rent in advance involves a debit to Prepaid Rent and a credit to Cash. _____ e) Recognition of Rent Expense (when a cash payment had previously been made in advance) involves a debit to Rent Expense and a credit to Cash.

Which is one effect of the following journal entry?

The left side of a T-account is known as the:

Which account is increased by a credit to the account?

The left side of a T-account is the credit side.

Indicate whether each of the following statements concerning the debit-credit feature of the accounting model is true or false. _____ a) Upon payment of an account payable, the liability account should be debited. _____ b) Payment of a cash expense requires a debit to cash and a credit to the expense. _____ c) On a T-account debits are entered on the left and credits are entered on the right. _____ d) A debit entry decreases an asset account. _____ e) Increases in revenues are recorded as debits.

Source documents provide information that serves as the basis for entries into the accounting system. Examples of source documents include invoices and deposit tickets.

The financial statement ratio that may be of greatest interest to a company's stockholders is the amount of its return on equity.

Hayes, Inc. had the following balances on its 12/31/13 balance sheet. If Hayes were to purchase land for $40,000 on credit under an agreement to pay for the land in one year, what would be its debt-to-assets ratio immediately after the purchase?

The balance in Retained Earnings is decreased by debiting the account.

Which of the following accounts normally has a debit balance?

Gander Company's accounts and their balances as of December 31, 2013 are listed in alphabetical order below. The account balances do include the effects of the company's year-end adjusting entries. Required: a) Prepare the adjusted trial balance for Gander Company as of December 31, 2013. b) Prepare Gander's 2013 income statement and balance sheet.

The following transactions apply to Jack's Computer Service for the year 2013. 1) Issued stock to investors for $15,000 cash. 2) Purchased land for $12,000 cash. 3) Performed services on account for $17,000. 4) Collected $11,200 on accounts receivable. 5) Paid operating expenses of $6,500. Required: a) Draw T-accounts and post the above transactions to the appropriate T-accounts. b) Prepare a balance sheet for Jack's Computer Service for December 31, 2013.

What is one effect of the following general journal entry?

The Greene Corporation recorded a business event using T-accounts as follows: Which of the following reflects how this event affects the company's financial statements?

The information in the following T-accounts of Gibson Company indicates that:

Many companies choose to end their fiscal years during a part of the year when they expect low activity.

An adjusting entry recorded as a debit to Salaries Expense and a credit to Salaries Payable.