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Exam 2: The Accounting Information System

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Question 81

Multiple Choice

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On January 1, Brad Inc. sold $30,000 in products to a customer on account. Then, on January 10, Brad collected the cash on that account. What is the impact on Brad's accounting equation from the collection of cash on January 10?

A) No net effect to the accounting equation.
B) Assets increase and liabilities decrease.
C) Assets decrease and liabilities decrease.
D) Assets increase and stockholders' equity increases.

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Question 82

Multiple Choice

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The owner of an office building should report rent collected in advance as a debit to Cash and a credit to:

A) A liability.
B) An asset other than Cash.
C) A revenue.
D) An owners' equity.

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Question 83

Multiple Choice

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Schooner Inc. purchased equipment by signing a note payable. This transaction would be recorded as:

Assume that cash is paid for rent to cover the next year. The appropriate debit and credit are:

Amounts owed from customers are recorded in the Accounts Receivable account.

How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employee salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance

Paying for one year of rent in advance does not affect the accounting equation.

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

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

Which of the following accounts has a credit balance?

Providing services to customers on account would affect the balances reported in which financial statement(s) ?

Rite Shoes was involved in the transactions described below. Record each transaction. If an entry is not required, state "No Entry." (a) Purchased $8,200 of supplies on account. (b) Paid weekly salaries, $920. (c) Provide services to customers: Cash: $7,100; On account: $5,300. (d) Paid for supplies purchased in (a) above. (e) Placed an order for $6,200 of supplies.

Receiving assets from customers before services are performed results in:

A trial balance represents the:

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

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

A list of all account names used to record transactions of a company is referred to as a T-account.

A company purchases office supplies on account for $7,500. Record the transaction.

The process of transferring the debit and credit information from the journal to individual accounts in the general ledger is called journalizing.

A company pays $12,000 to purchase a one-year insurance policy. Record the transaction.