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Exam 2: The Accounting Information System

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Question 91

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Revenues have the effect of increasing retained earnings.

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Question 92

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Explain what it means that external transactions have a dual effect.

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Dual effect refers to each transaction h...

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Question 93

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Describe the six steps in the measurement process of external transactions.

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. -____ Contains all the accounts of a company.

On July 31, ALOE Inc. received $5,000 cash from a customer who previously purchased ALOE's products on account. What should ALOE Inc. record at the time it receives cash?

For each of the following accounts, indicate whether a debit or credit is used to increase (+) or decrease (-) the balance of the account. $\begin{array} { | l l l | } \hline \text { Account } & \text { Debit } & \text { Credit } \\\text { (a) Common Stock } & \\\text { (b) Liability } & \\\text { (c) Asset } & \\\text { (d) Revenue } & \\\text { (e) Dividend } & \\\text { (f) Retained Earnings } \\\text { (g) Expense } & \\\hline\end{array}$

A company received a bill for newspaper advertising services received, $400. The bill will be paid in 10 days. How would the transaction be recorded today?

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

When a payment is made on an account payable:

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.

The two components of stockholders' equity are Debits and Credits.

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

Lithuanian Motors has the following balance sheet accounts: $\begin{array} { l r } \text { Land } & \$ 170,000 \\\text { Equipment } & 66,000 \\\text { Salaries Payable } & ? \\\text { Notes Payable } & 88,000 \\\text { Supplies } & 14,000 \\\text { Cash } & 26,000 \\\text { Common Stock } & 100,000 \\\text { Retained Earnings } & 40,000 \\\text { Accounts Payable } & ? \\\text { Prepaid Rent } & 12,000\end{array}$ If the company has total assets of $288,000, what is the balance of the company's Salaries Payable account?

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.

Consider the following list of accounts: Accounts Payable Cash Prepaid Rent Common Stock Salaries Payable Equipment Supplies Rent Expense How many of these accounts have a normal credit balance?

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?

A revenue has what effect on the accounting equation?

Providing services and receiving cash will:

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

The following statements pertain to recording transactions. Which of them are true? I. Total debits should equal total credits. II) It is possible to have multiple debits or credits in one journal entry. III) Assets are always listed first in journal entries. IV) Some journal entries will have debits only.