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Exam 3: The Accounting Information System

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Question 91

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Debits

A) increase both assets and liabilities.
B) decrease both assets and liabilities.
C) increase assets and decrease liabilities.
D) decrease assets and increase liabilities.

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Question 92

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Unearned Service Revenue is classified as a liability on the balance sheet.

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Question 93

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The payment of a liability decreases both cash and accounts payable.

Which of the following correctly identifies normal balances of accounts?

A new account is opened for each transaction entered into by a business firm.

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (-).

A debit to an account always indicates an increase in that account.

Eight transactions are recorded in the following T-accounts: Indicate for each debit and each credit: (a) whether an asset, liability, common stock, dividends, revenue, or expense account was affected and (b) whether the account was increased (+) or (-) decreased. Answers should be presented in the following chart form:

Borrowing money and issuing shares of stock are

When a company performs a service but has not yet received payment, it

Under IFRS, the trial balance

Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

A revenue account

The right side of an account

In its simplest form, an account consists of all of the following except

Powers Corporation received a cash advance of $500 from a customer. As a result of this event,

If total assets are increased, there must be a corresponding increase in liabilities or a decrease in stockholders' equity.

This information relates to Hanshew Real Estate Agency. Oct. 1 Stockholders invested $35,000 in exchange for common stock of the corporation. 2 Hires an administrative assistant at an annual salary of $36,000. 3 Buys equipment for $3,500 on account. 6 Sells a house and lot for M Springer; commissions due from Springer, $10,000 (not paid by Springer at this time). 10 Receives cash of $140 as commission for acting as rental agent renting an apartment. 27 Pays $700 on account for the equipment purchased on October 3. 30 Pays the administrative assistant $3,000 in salary for October. Instructions (a) Journalize the transactions. Do not provide explanations. (b) Post the transactions to T accounts.

Which statement about an account is true?

The chart of accounts is a special ledger used in accounting systems.