Question 1

Record the effects of the following transactions on the accounting equation. After recording the transactions, compute the ending balances of the equation to prove it balances.
1. A business received $10,000 and issued common stock.
2. Paid $2,000 monthly rent for office space.
3. Purchased $3,000 of office equipment, paying cash.
4. Purchased $500 of office supplies on account.
5. Recorded $4,000 of revenue, receiving cash.
6. Performed $1,500 of services on account.
7. Paid utilities expense of $900.
8. Collected cash from a customer on account, $1,000.
9. Borrowed $10,000 from the bank and signed a note payable.

Accepted Answer

The answer of Record the effects of the following transactions...

Question 2

An account will have a debit balance if:

Accepted Answer

A)   the amount of the credits exceeds the amount of the debits.
B)   the amount of the debits exceeds the amount of the credits.
C)   the account has more debit entries than credit entries.
D)   it is a liability account.E) C) and D)
F) None of the above

Question 3

Which of the following business events would NOT be recorded in a company's accounting records?

Accepted Answer

A)   The company paid a monthly utility bill.
B)   The company issued 100 shares of common stock.
C)   The company purchased two acres of land for future plant expansion.
D)   The company signed a contract to provide services in the next accounting period.E) A) and D)
F) C) and D)

Question 4

Receiving a payment from a customer on account:

Accepted Answer

A)   increases stockholders' equity.
B)   has no effect on total assets.
C)   decreases stockholders' equity.
D)   decreases liabilities.E) B) and C)
F) None of the above

Question 5

All companies must use the same chart of accounts.

Accepted Answer

A) True 
 B)False

Question 6

The only way to find a transposition error in the trial balance is to go back to the source documents.

Accepted Answer

A) True 
 B)False

Question 7

When a company borrows cash from the bank:

Accepted Answer

A)   total assets remain the same.
B)   liabilities are increased.
C)   retained earnings is decreased.
D)   total liabilities remain the same.E) All of the above
F) A) and B)

Question 8

Lucy Morton opened an engineering office and titled the business Engineering Enterprises P.C. During its first month of operations, it completed the following transactions: I. Lucy invested $30,000 in the business, which in turn issued common stock to her.
II. The business purchased equipment on account for $6,000.
II. The business provided engineering services on account, $10,000.
III. The business paid salaries to the receptionist, $1,000.
IV. The business received cash from a customer as payment on account $6,000.
V. The business borrowed $8,000 from the bank, issuing a note payable.
Total liabilities would be:

Accepted Answer

A)   $0.
B)   $6,000.
C)   $14,000.
D)   $20,000.E) B) and C)
F) A) and B)

Question 9

ABC Company began business in June when stockholders invested $80,000 in the business, which in turn issued its common stock to them. ABC Company then purchased a building for $40,000 cash and inventory for $20,000 cash, performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. What is the amount of total assets?

Accepted Answer

A)   $80,000
B)   $88,000
C)   $108,000
D)   $163,000E) A) and D)
F) None of the above

Question 10

Accounts payable is increased with a credit.

Accepted Answer

A) True 
 B)False

Question 11

A company completed the following transactions during the month of October: I. Purchased office supplies on account, $4,000.
II. Provided services for cash, $10,000.
III. Provided services on account, $12,000.
IV. Collected cash from a customer on account $7,000.
V. Paid the monthly rent of $3,000.
What was the company's net income for the month?

Accepted Answer

A)   $0
B)   $10,000
C)   $19,000
D)   $22,000E) A) and D)
F) B) and D)

Question 12

Which of the following is a correct statement?

Accepted Answer

A)   Shareholders' equity is also called Proprietorship Equity.
B)   A proprietorship has more than one capital account.
C)   A partnership has a separate owner's equity account for each partner.
D)   Retained earnings is the owner's investment in the corporation.E) C) and D)
F) B) and C)

Question 13

Performing services on account:

Accepted Answer

A)   decreases both assets and liabilities.
B)   increases assets and decreases stockholders' equity.
C)   decreases revenues and decreases stockholders' equity.
D)   increases both net income and stockholders' equity.E) None of the above
F) B) and C)

Question 14

The financial statements can be prepared from the information on the trial balance.

Accepted Answer

A) True 
 B)False

Question 15

The balance of an account:

Accepted Answer

A)   must be determined after each transaction.
B)   is entered on the debit side if the total debits to the account exceed the total credits to the account.
C)   is put on the top of the T account next to the account name.
D)   can be determined from the journal.E) A) and B)
F) A) and C)

Question 16

Journal entries can have more than two accounts as long as the total debits equal the total credits.

Accepted Answer

A) True 
 B)False

Question 17

Cash dividends paid to stockholders will:

Accepted Answer

A)   increase assets and decrease liabilities.
B)   increase assets and increase liabilities.
C)   have no effect on stockholders' equity or revenues.
D)   decrease assets and decrease stockholders' equity.E) None of the above
F) A) and B)

Question 18

Transactions:

Accepted Answer

A)   must be recorded for every company event.
B)   provide objective information about the financial impact on a company.
C)   are recorded only if the amounts are significant to the company.
D)   only have one side that needs to be recorded.E) A) and C)
F) None of the above

Question 19

Which of the following statements regarding a trial balance is TRUE?

Accepted Answer

A)   A trial balance may be taken at any time during the accounting period.
B)   A trial balance is a list of all accounts with their balances.
C)   A trial balance shows that total debits equals total credits.
D)   All of the above are true.E) A) and B)
F) A) and C)

Question 20

An important fact to remember when analyzing the transactions of a company is that:

Accepted Answer

A)   the income statement data appears under Common Stock.
B)   the balance sheet data includes the ending balances of the asset, liabilities and revenues of the company.
C)   dividends are added when computing the ending balance of retained earnings.
D)   the income statement includes revenues and expenses.E) A) and B)
F) B) and D)

Exam 2: Transaction Analysis

The balance of an account:

Correct Answer
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Accounts payable is increased with a credit.

Correct Answer
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Which of the following statements regarding a trial balance is TRUE?

Correct Answer
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The only way to find a transposition error in the trial balance is to go back to the source documents.

Correct Answer
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An account will have a debit balance if:

Correct Answer
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Which of the following business events would NOT be recorded in a company's accounting records?

Correct Answer
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Correct Answer
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When a company borrows cash from the bank:

Correct Answer
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Journal entries can have more than two accounts as long as the total debits equal the total credits.

Correct Answer
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Performing services on account:

Correct Answer
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Correct Answer
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Which of the following is a correct statement?

Correct Answer
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Transactions:

Correct Answer
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The financial statements can be prepared from the information on the trial balance.

Correct Answer
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Cash dividends paid to stockholders will:

Correct Answer
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All companies must use the same chart of accounts.

Correct Answer
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An important fact to remember when analyzing the transactions of a company is that:

Correct Answer
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Receiving a payment from a customer on account:

Correct Answer
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Correct Answer
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Exam 2: Transaction Analysis

The balance of an account:

Correct AnswerverifiedShow Answer

Accounts payable is increased with a credit.

Correct AnswerverifiedShow Answer

Which of the following statements regarding a trial balance is TRUE?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The only way to find a transposition error in the trial balance is to go back to the source documents.

Correct AnswerverifiedShow Answer

An account will have a debit balance if:

Correct AnswerverifiedShow Answer

Which of the following business events would NOT be recorded in a company's accounting records?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

When a company borrows cash from the bank:

Correct AnswerverifiedShow Answer

Journal entries can have more than two accounts as long as the total debits equal the total credits.

Correct AnswerverifiedShow Answer

Performing services on account:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a correct statement?

Correct AnswerverifiedShow Answer

Transactions:

Correct AnswerverifiedShow Answer

The financial statements can be prepared from the information on the trial balance.

Correct AnswerverifiedShow Answer

Cash dividends paid to stockholders will:

Correct AnswerverifiedShow Answer

All companies must use the same chart of accounts.

Correct AnswerverifiedShow Answer

An important fact to remember when analyzing the transactions of a company is that:

Correct AnswerverifiedShow Answer

Receiving a payment from a customer on account:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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