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Exam 2: The Accounting Information System

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Question 51

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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 decreased Gotebo's total assets?

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

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Question 52

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

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Question 53

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

Which of the following transactions causes a decrease in stockholders' equity?

A journal provides a chronological record of all transactions affecting a firm.

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

The general ledger includes all accounts used to record the company's transactions.

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.

Bostel wanted to expand the size of its warehouse in order to generate more profits.The company decided to purchase the building adjacent to its existing warehouse.The company pays for the building by borrowing from the bank.The purchase would be recorded as:

For each of the following accounts,indicate whether a debit or credit is used to increase (+)or decrease (-)the balance of the account.

Using the notion that the accounting equation (Assets = Liabilities + Stockholders' Equity)must remain in balance,indicate whether each of the following transactions is possible. (a)Cash decreases; Accounts Payable decreases. (b)Salaries Expense increases; Salaries Payable decreases. (c)Accounts Receivable decreases; Service Revenue increases.

Record the following transactions for the Stroud Music Store: (a)Provide music lessons to students for $12,000 on account. (b)Purchase music supplies on account,$1,500. (c)Pay rent for the current month,$2,000. (d)Receive $10,000 cash from students in (a)above.

Paying dividends to its stockholders causes a company's stockholders' equity to decrease.

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

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?

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

Which of the following is not part of measuring external transactions?

Providing services to customers for cash causes stockholders' equity to increase.

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

Which of the following accounts would normally have a debit balance and appear in the balance sheet?