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Accounting CH2

STUDY
PLAY
Consider the following transactions:
I. Owners invested $8,000 cash to begin the business
III. Provided services for cash, $6,000
IV. Provided services on account, $4,000
V. Paid cash for expenses, $7,500

How much net income did the business earn?
A) $2,500
B) $4,500
C) $6,500
D) $10,500
A
Accounting transactions are initially recorded in the:
A) T-account.
B) ledger.
C) journal.
D) trial balance.
C
Little Company had a beginning cash balance of $10,000, received cash of $8,000 and ended the month with a cash balance of $6,000. Cash payments for the month were:
A) $6,000.
B) can't be determined from the information given.
C) $12,000.
D) $24,000.
C
The Chart of Accounts is:
A) a listing of all open accounts and their balances.
B) expected to be in balance at all times.
C) a listing of all accounts used to record the business transactions.
D) not necessary to record transactions.
C
A business transaction has occurred when:
A) an event affects the entity's financial position.
B) the event can be reliably measured.
C) the accountant determines that the event is important enough to be a business transaction.
D) both A and B occur.
C
The proper order for the accounting process is:
A) posting, transaction occurs, journalizing.
B) transaction occurs, posting, journalizing.
C) transaction occurs, transaction analyzed, journalizing, and posting.
D) transaction occurs, posting, transaction analyzed, journalizing.
C
An owner makes an investment of cash into the business. This transaction includes a:
A) debit to Common Stock and a credit to Common Stock.
B) debit to Cash and a credit to Common Stock.
C) debit to Retained Earnings and a credit to Cash.
D) debit to Common Stock and a credit to Retained Earnings.
B
Which of the following accounts have a normal debit balance?
A) Equipment
B) Accounts Payable
C) Retained Earnings
D) Service Revenue
A
The XYZ Company purchased supplies for $5,000 on account. The entry to record this transaction is:
A) Cash 5,000
Supplies 5,000
B) Supplies 5,000
Accounts Payable 5,000
C) Supplies 5,000
Accounts Receivable 5,000
D) Supplies 5,000
Cash 5,000
B
Which of the following is not a business transaction?
A) The company sells goods for cash.
B) The company buys land for cash.
C) The company hires a new president.
D) The company pays a dividend to its stockholders.
C
The accounts receivable account for Moon Rivers had a beginning balance of $6,000. During August, the company received payments of $8,000 and added new accounts receivable of $11,000. At the end of August the balance in accounts receivable is _____ and is a ______.
A) $9,000, credit
B) $9,000, debit
C) $3,000, debit
D) $3,000, credit
B
Prepaid expense accounts appear on:
A) the Income Statement.
B) the Balance Sheet.
C) the Statement of Retained Earnings and on the Income Statement.
D) both the Income Statement and Balance Sheet
B
Borrowing money from the bank by signing a note payable:
A) increase stockholders' equity.
B) have no effect on stockholders' equity.
C) decrease liabilities.
D) increase net income.
B
Revenues are recorded when:
A) the company signs a contract.
B) work is begun on the job.
C) cash is received from the customer.
D) the work is completed on the job, whether the cash is received.
D
Consider the following transactions:
I Borrowed cash on a note payable, $80,000
II Provided services on account, $10,000
III. Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
Total liabilities are:
A) $1,200.
B) $81,200.
C) $98,000.
D) $80,000.
B
Joe Donaldson deposited $80,000 in a bank account, purchased a company for $60,000 cash (Building $40,000 and Inventory $20,000), performed services for clients for $10,000 cash, purchased supplies for $5,000 cash, and paid utilities of $2,000 cash. The journal entry to record the purchase of the company includes a:
A) credit to Building for $40,000.
B) debit to Common Stock for $60,000.
C) debit to Inventory for $20,000.
D) credit to Cash for $40,000.
C
A company received cash in exchange for issuing stock. This transaction increased assets and
A) increased expenses.
B) increased revenues.
C) increased liabilities.
D) increased equity.
D
Which element(s) of an accounting system provide(s) information about the balance in each account?
A) Source documents
B) Journals
C) Ledgers
D) Accrual record
C
Which of the following transactions increase total assets?
I. Borrowed cash on a note payable, $80,000
II Provided services on account, $10,000
III Received cash from a customer as payment on account, $8,000
IV. Received a utility bill, $1,200
A) I and II
B) I and III
C) I, II, and III
D) All of these answers are correct
A
A company purchased office supplies for cash. This transaction increased assets and:
A) increased equity.
B) increased liabilities.
C) increased revenues.
D) decreased assets.
D