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Exam 2: The Accounting Cycle: During the Period

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Question 41

Multiple Choice

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An increase to an asset account is shown with a ______________.A decrease to an asset account is shown with a ______________.

A) Debit;Debit
B) Credit;Debit
C) Debit;Credit

D) A) and B)
E) All of the above

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Question 42

Multiple Choice

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Following are transactions of Gotebo Tanners,Inc. ,a new company,during the month of January: 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) A) and B)
E) A) and C)

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Question 43

True/False

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After posting transactions to the general ledger accounts,the sum of the accounts with debit balances should equal the sum of the accounts with credit balances.

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

Consider the following transactions: Issued common stock for cash.Purchased equipment by signing a note payable.Provided services to customers on account.Collected cash from customers on account.How many of these four transactions increased the given company's total liabilities?

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

"Record revenue when goods or services are provided to customers" is the definition of which principle in accounting?

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

If total debits equal total credits in the trial balance,then all balances are correct.A trial balance could contain offsetting errors where the balance of one account is misstated in one direction but the balance of another account (with the same type of debit or credit balance)is misstated in the other direction.

A debit to an account balance always results in the balance increasing.A debit increases assets,dividends,and expenses,but decreases liabilities,stockholders' equity,and revenues.

External transactions are transactions the firm conducts with a separate economic entity,such as selling products to a customer,purchasing supplies from a vendor,paying salaries to an employee,and borrowing money from a bank.

Revenues normally carry a _______ balance and are shown in the ______________.

Dividends normally carry a _______ balance and are shown in the ______________.

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

Receiving cash from customers before services are performed results in:

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

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

Borrowing cash from the bank is recorded with a debit to cash.

If a transaction causes total assets of the company to increase by $2,000,then liabilities plus stockholders' equity also increases by $2,000.

When a company pays cash for equipment,what is the effect on the accounting equation for that company?