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Exam 2: The Accounting Information System

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Question 61

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

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Question 62

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

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Question 63

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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:

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

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?

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

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.

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.

Purchasing office supplies on account will:

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

An account receivable can best be defined as:

External events include all of the following except:

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:

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.

Purchasing equipment using cash causes assets to increase.

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

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

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?

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