Question 1

The Holmes Company purchased a building for $75,000 in cash.What is the effect on current assets?

Accepted Answer

A)  Increase in current assets
B)  Decrease in current assets
C)  No effect on current assets
D)  Unable to determineE) All of the above
F) B) and D)

Question 2

One effect on the accounting equation when a firm lends money is

Accepted Answer

A)  stockholders' equity decreases.
B)  liabilities decrease.
C)  liabilities increase.
D)  total assets remain the same.E) B) and C)
F) A) and B)

Question 3

Owners of Tri-States Industries, Ralph and Maureen, are sent a dividend check from the company.For this transaction, what is the effect on the accounting equation for Tri-States Industries?

Accepted Answer

A)  Assets decrease and stockholders' equity decreases.
B)  Assets increase and stockholders' equity increases.
C)  Liabilities increase and stockholders' equity decreases.D) A) and B)
E) All of the above

Question 4

The initial step in the recording process is posting.

Accepted Answer

A) True 
 B)False

Question 5

Transactions are recorded in the general journal in:

Accepted Answer

A)  Alphabetical order.
B)  Account number order.
C)  Chronological order.
D)  Financial statement order.E) C) and D)
F) A) and B)

Question 6

Payment of a dividend increases both cash and stockholders' equity of the distributing business.

Accepted Answer

A) True 
 B)False

Question 7

Parachute Country Club
Use the selected accounts for Parachute Country Club presented below to answer the following questions) .   
-Read the information about Parachute Country Club.
Which of the following describes the transaction which occurred on August 7?

Accepted Answer

A)  Sold club memberships on credit.
B)  Cash sales of daily fees.
C)  Collected an advance deposit in cash.
D)  Received cash payments of accounts receivable.E) A) and B)
F) A) and C)

Question 8

Payment is made for an electric bill which was received and recorded earlier.For this transaction, identify the effect on the accounting equation.

Accepted Answer

A)  Assets increase and liabilities increase.
B)  Assets increase and stockholders' equity increases.
C)  Liabilities increase and stockholders' equity decreases.
D)  Liabilities decrease and assets decrease.E) B) and D)
F) B) and C)

Question 9

If the business has an from a customer, then the customer has an to the business.

Accepted Answer

A)  account receivable; account receivable
B)  account payable; account payable
C)  account receivable; account payable
D)  account payable; account receivableE) All of the above
F) B) and C)

Question 10

A debit entry increases assets, decreases liabilities, or decreases stockholders' equity.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following transactions affects the liabilities for Gravette, Inc.?

Accepted Answer

A)  Supplies are purchased for cash by Gravette.
B)  Gravette places an order for merchandise with a supplier; the merchandise will be shipped to Ernest White in 60 days.
C)  The owners of Gravette invest $100,000 in the company.
D)  Payment is made on a bank loan which Gravette had obtained 6 months ago.E) B) and D)
F) B) and C)

Question 12

The totaling of each side of a T account is known as .

Accepted Answer

The answer of The totaling of each side of a...

Question 13

Every accounting transaction affects both the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following events transactions)  is an internal event for a business entity?

Accepted Answer

A)  An accountant provides services for clients.
B)  An accountant purchases computer equipment to maintain business records and prepare legal documents.
C)  Periodically, part of the cost of the computer equipment used by an accountant is assigned to depreciation expenses.
D)  An accountant receives cash payments from clients who were billed for services.E) B) and D)
F) B) and C)

Question 15

The normal balance of the Dividends account is a credit.

Accepted Answer

A) True 
 B)False

Question 16

A company's chart of accounts will reflect the nature of its business.

Accepted Answer

A) True 
 B)False

Question 17

The left or debit side of a liability account is used to record .

Accepted Answer

The answer of The left or debit side of a...

Question 18

Under the double-entry system of accounting, every transaction is entered in at least two accounts on opposite sides of T accounts.

Accepted Answer

A) True 
 B)False

Question 19

A debit is a negative entry.

Accepted Answer

A) True 
 B)False

Question 20

Use the following five transactions for Morton & Associates, Inc.to answer the questions) . 
-See the transactions for Morton & Associates.
Based only on these transactions, what is the total amount of expenses that should appear on the income statement for the month of May?

Accepted Answer

A)  $ 430
B)  $ 850
C)  $ 1,280
D)  $ 1,440E) A) and B)
F) B) and D)

Exam 3: Processing Accounting Information

Payment is made for an electric bill which was received and recorded earlier.For this transaction, identify the effect on the accounting equation.

Correct AnswerverifiedShow Answer

A debit entry increases assets, decreases liabilities, or decreases stockholders' equity.

Correct AnswerverifiedShow Answer

Parachute Country Club Use the selected accounts for Parachute Country Club presented below to answer the following questions) . -Read the information about Parachute Country Club. Which of the following describes the transaction which occurred on August 7?

Correct AnswerverifiedShow Answer

Transactions are recorded in the general journal in:

Correct AnswerverifiedShow Answer

The left or debit side of a liability account is used to record .

Correct AnswerverifiedShow Answer

Payment of a dividend increases both cash and stockholders' equity of the distributing business.

Correct AnswerverifiedShow Answer

Every accounting transaction affects both the balance sheet and the income statement.

Correct AnswerverifiedShow Answer

Under the double-entry system of accounting, every transaction is entered in at least two accounts on opposite sides of T accounts.

Correct AnswerverifiedShow Answer

Which of the following transactions affects the liabilities for Gravette, Inc.?

Correct AnswerverifiedShow Answer

Which of the following events transactions) is an internal event for a business entity?

Correct AnswerverifiedShow Answer

The Holmes Company purchased a building for $75,000 in cash.What is the effect on current assets?

Correct AnswerverifiedShow Answer

A company's chart of accounts will reflect the nature of its business.

Correct AnswerverifiedShow Answer

The totaling of each side of a T account is known as .

Correct AnswerverifiedShow Answer

The normal balance of the Dividends account is a credit.

Correct AnswerverifiedShow Answer

The initial step in the recording process is posting.

Correct AnswerverifiedShow Answer

If the business has an from a customer, then the customer has an to the business.

Correct AnswerverifiedShow Answer

Use the following five transactions for Morton & Associates, Inc.to answer the questions) . -See the transactions for Morton & Associates. Based only on these transactions, what is the total amount of expenses that should appear on the income statement for the month of May?

Correct AnswerverifiedShow Answer

One effect on the accounting equation when a firm lends money is

Correct AnswerverifiedShow Answer

Owners of Tri-States Industries, Ralph and Maureen, are sent a dividend check from the company.For this transaction, what is the effect on the accounting equation for Tri-States Industries?

Correct AnswerverifiedShow Answer

A debit is a negative entry.

Correct AnswerverifiedShow Answer

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