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Exam 2: The Accounting Information System

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Question 81

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Which of the following is/are true about a "debit"? I.It is part of the double-entry procedure that keeps the accounting equation in balance. II) It represents an increase to assets. III) It represents a decrease to liabilities. IV) It is on the right side of a T-account.

A) I and II.
B) IV only.
C) I,II,and III.
D) I,II,III,and IV.

E) None of the above
F) All of the above

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Question 82

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Childers Service Company provides services to customers totaling $3,000,for which it billed the customers.How would the transaction be recorded?

A) Debit Cash $3,000,credit Service Revenue $3,000.
B) Debit Accounts Receivable $3,000,credit Service Revenue $3,000.
C) Debit Accounts Receivable $3,000,credit Cash $3,000.
D) Debit Service Revenue $3,000,credit Accounts Receivable $3,000.

E) B) and C)
F) B) and D)

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Question 83

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Suppose a company has the following balance sheet accounts: $\begin{array} { l r } { \text { Accounts } } & \text { Balances } \\\hline \text { Land } & \$ 9,000 \\\text { Building } & ? \\\text { Salaries payable } & 3,700 \\\text { Common stock } & ? \\\text { Accounts payable } & 2,600 \\\text { Cash } & 5,300 \\\text { Retained earnings } & 11,600 \\\text { Supplies } & 3,200 \\\text { Equipment } & 4,500\end{array}$ Calculate the missing amounts assuming the company has total assets of $40,000.

Selling common stock for cash is recorded with a debit to common stock.

When a company incurs workers' salaries but does not pay them,how will the basic accounting equation be affected?

A debit to an account balance always results in the balance increasing.

Consider the following accounts: Dividends Insurance Expense Cash Service Revenue How many of these accounts are increased with credits?

Use the following information to prepare a trial balance. $\begin{array} { | l r l r | } \hline \text { Cash } & \$ 6,200 & \text { Dividends } & \$ 1,200 \\\text { Unearned revenue } & 1,200 & \text { Salaries expense } & 2,200 \\\text { Prepaid insurance } & 1,200 & \text { Accounts receivable } & 3,400 \\\text { Accounts payable } & 1,900 & \text { Common stock } & 6,200 \\\text { Retained earnings } & 1,600 & \text { Service revenue } & 7,100 \\\text { Utilities expense } & 3,000 & \text { Maintenance expense } & 800 \\\hline\end{array}$

If a transaction causes total assets of the company to increase by $5,000 and total liabilities to increase by $3,000,then stockholders' equity increases by $8,000.

Providing services and receiving cash will:

Which of the following is not possible when recording a transaction?

Purchasing office supplies on account causes assets to increase and liabilities to increase.

An expense has what effect on the accounting equation?

Which of the following is possible for a particular business transaction?

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?

On December 1,2012,Bears Inc.signed a contract with a retailer to supply maintenance for the next calendar year.How should this transaction be recorded on December 1,2012?

If the liabilities of a company increased by $55,000 during a month and the stockholders' equity decreased by $21,000 during that same month,did assets increase or decrease and by how much?

When a company issues common stock for cash,what is the effect on the accounting equation for the company?

A company purchases machinery for $15,000 cash.Record the transaction.

Consider the following accounts: Utilities Expense Accounts Payable Service Revenue Common Stock How many of these accounts are increased with debits?