Accounting CH2

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
Accounting transactions are initially recorded in the:
A) T-account.
B) ledger.
C) journal.
D) trial balance.
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.
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.
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.
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.
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.
Which of the following accounts have a normal debit balance?
A) Equipment
B) Accounts Payable
C) Retained Earnings
D) Service Revenue
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
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.
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
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
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.
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.
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.
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.
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.
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
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 company purchased office supplies for cash. This transaction increased assets and:
A) increased equity.
B) increased liabilities.
C) increased revenues.
D) decreased assets.