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Exam 2: The Accounting Information System

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Question 31

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Following are transactions of Gotebo Tanners,Inc.,a new company,during the month of January 2012: 1.Issued 10,000 shares of common stock for $15,000 cash. 2) Purchased land for $12,000,signing a note payable for the full amount. 3) Purchased office equipment for $1,200 cash. 4) Received cash of $14,000 for services provided to customers during the month. 5) Purchased $300 of office supplies on account. 6) Paid employees $10,000 for their first month's salaries. How many of these transactions increased Gotebo's liabilities?

A) Four.
B) Three.
C) Two.
D) One.

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Question 32

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A company provides services to customers on account for $2,400.Indicate the amount of increases and decreases in the accounting equation.

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Question 33

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A company received a bill for newspaper advertising services received,$400.The bill will be paid in 10 days.How would the transaction be recorded today?

A list of all account names used to record transactions of a company is referred to as a T-account.

Consider the following list of accounts: Accounts Payable Cash Prepaid Rent Common Stock Salaries Payable Equipment Supplies Rent Expense How many of these accounts have a normal credit balance?

A company pays $1,300 on account for supplies previously purchased on account.Indicate the amount of increases and decreases in the accounting equation.

If total debits equal total credits in the trial balance,then all balances are correct.

Purchasing equipment using cash causes assets to increase.

Summer Leasing received $12,000 for 24 months rent in advance.How should Summer record this transaction?

Xenon Corporation borrows $75,000 from First Bank.Xenon Corporation records this transaction with a:

How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employee salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance

Which one of the following accounts will have a credit balance?

Which of the following is not an asset account?

A company received a utility bill of $600 but did not pay it.Indicate the amount of increases and decreases in the accounting equation.

Providing services on account would be recorded with a:

Which of the following is NOT possible for a business transaction?

A credit to an account balance always results in the balance decreasing.

For each of the following accounts,indicate whether we use a debit or a credit to decrease the balance of the account. (a)Accounts Receivable (b)Accounts Payable (c)Salaries Expense (d)Service Revenue (e)Supplies (f)Common Stock (g)Advertising Expense (h)Dividends

On March 3,Cobra Inc.purchased a desk for $450 on account.On March 22,Cobra purchased another desk for $500 also on account,and then on March 24,Cobra paid $400 on account.At the end of March,what amount should Cobra report for desks (assuming these two desks were the only desks they had) ?

Internal transactions are events that affect the financial position of the company but do not include an exchange with a separate economic entity.Examples are using supplies on hand and earning revenues after having received cash in advance from a customer.