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Exam 2: The Accounting Information System

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Question 61

Multiple Choice

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Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Resources owed by a company.

A) Assets
B) Debit
C) Journal entry
D) Liabilities
E) Revenues
F) Expenses
G) Credit
H) General ledger
I) Trial balance
J) Dividends

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Question 62

Multiple Choice

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Purchasing office supplies on account will:

A) Not change assets.
B) Increase assets and decrease liabilities.
C) Increase assets and increase liabilities.
D) Increase assets and increase stockholders' equity.

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Question 63

Multiple Choice

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Which of the accounts are decreased on the debit side and increased on the credit side?

Amounts owed to suppliers for supplies purchased on account are defined as:

Purchasing equipment using cash causes assets to increase.

Which of the following transactions would cause a decrease in both assets and stockholders' equity?

Borrowing cash from the bank causes assets to increase and liabilities to increase.

Providing services to customers on account causes assets to increase and stockholders' equity to increase.

Jerome purchased a building for his business by signing a note to pay the amount due over the next ten years. Which of the following correctly describes how to record this transaction?

Liability accounts increase with a credit and decrease with a debit.

Accounts Receivable account has a beginning balance of $10,000 and the company provides services of $50,000 on account during the month. The ending balance was $12,000. How much did the company receive from customers during the month?

Liability accounts increase with a debit and decrease with a credit.

An account receivable can best be defined as:

Consider the following T-account for Accounts Payable. $\begin{array}{l}\text { Accounts Payable }\\\begin{array} { c | r } \hline & 10,200 \\8,800\\ & 4,500\end{array}\end{array}$ 1. Compute the balance of the Accounts Payable account. 2. Give an example of a transaction that would have resulted in the $8,800 posting to the account. 3. Give an example of a transaction that would have resulted in the $4,500 posting to the account.

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

External events include all of the following except:

Clement Company paid an account payable related to a previous utility bill of $1,000. This transaction should be recorded as follows on the payment date:

Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the best term by placing the letter designating the term in the space provided. -____ Costs to generate revenues.

When the company pays stockholders a dividend, what is the effect on the accounting equation for that company?

Receiving cash in advance from a customer for services to be provided in the future causes assets to increase and stockholders' equity to increase.