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Exam 2: The Accounting Cycle: During the Period

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Question 31

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

A) True
B) False

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Question 32

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

A) True
B) False

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Question 33

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

Assume that $18,000 cash is paid for insurance to cover the next year.The appropriate debit and credit are:

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.

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

Paying employees' salaries for the current period is recorded with a debit to Salaries Expense.

Deferred Revenue is a liability account.

Which of the following accounts has a credit balance?

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

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.

Common Stock increases with a credit and decreases with a debit.

An expense has what effect on the accounting equation?

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.What was the balance of Gotebo's Cash account following these six transactions?

When a company pays $2,500 dividends to its stockholders,the transaction should be recorded as:

A(n) _______________ summarizes all transactions related to a particular item over a period of time.

If a company provides services on account,which of the following is true?

Tomlin & Company provides music for special occasions.On January 14,the Smith family hired Tomlin for an upcoming family wedding for an agreed upon fee of $10,000.The wedding was scheduled for May 23.As part of the agreement,the Smiths paid Tomlin half of the fee at the end of April with the remaining amount due by the end of June.How would Tomlin record the receipt of the final payment in June?

The two components of stockholders' equity are Debits and Credits.The two components of stockholders' equity are Common Stock and Retained Earnings.

When cash payments are made to stockholders,what is the effect on the company's accounts?