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2.4   Learning Objective 2-4 1) The double-entry system of accounting records the dual effects on the entity. 2) The amount remaining in an account is called its balance. 3) Double-entry accounting affects at least three accounts. 4) The left hand side of a T account is the debit side and the right hand side.
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2.1   Learning Objective 2-1 1) A transaction is any event that has a financial impact on the business that can be measured reliably. 2) Every transaction has two sides—you give something and you receive something. 3) Which of the following is NOT a business transaction? A) The company sells goods on account. B) The company buys.
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81) The Book Company had the following adjustments at December 31, the end of the accounting period: A.The Book Company uses straight-line depreciation for its equipment. The amount of depreciation to be recorded for the equipment is $10,500. B.Accrued interest of $2,000 on a note receivable will be received in January. C.On November.
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41) Refer to Exhibit 1.3. Total assets for ABC Company at the end of the year were: A) $74,000. B) $99,000. C) $141,000. D) $149,000. 42) Refer to Exhibit 1.3. Total liabilities for ABC Company at the end of the year were: A) $12,000. B) $17,000. C) $33,000. D) $45,000. 43) Refer to Exhibit 1.3. Net income for ABC Company.
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49) Anya Smith started Geek Speak, a computer consulting business, in February, 2012. The company completed the following transactions during March, 2012: 1.  Geek Speak paid Anya a dividend of $1,000. 2.  Received partial payment from customers on account, $1,500. 3.  Purchased a new computer for $1,800 and paid cash. 4.  Borrowed $10,000 from.
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A.The balance in Office Supplies before adjustment is $4,200. A physical count reveals $2,750 of supplies on hand at December 31. B.A computer was purchased on January 1 for $12,000. The computer has a useful life of 3 years and is depreciated using the straight-line method. C.A one-year insurance policy costing $5,400.
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Account Debit Credit Cash         600 Accounts Receivable       1,800 Inventory       3,000 Store Supplies       1,900 Prepaid Rent       1,500 Land     23,000 Building     50,000 Accumulated Depreciation–Building   7,500 Store Equipment      27,000 Accumulated Depreciation–Store Equipment 15,625 Accounts Payable 6,000 Notes Payable   2,500 Salaries Payable Unearned Revenue 8,000 Common Stock 31,655 Retained Earnings 2,520 Revenue 35,000 Rent Expense Store Supplies Expense Salaries Expense Depreciation Expense–Building Depreciation Expense–Store Equipment Totals   $108,800   $108,800 The following data is available from Mindy Meadows, Controller for Eckle Ltd.: A)  Store.
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36) The balance sheet reports information about: A) revenues, expenses, and equity. B) liabilities, equity, and expenses. C) assets, revenues, and liabilities. D) assets, liabilities, and owners' equity. 37) On the statement of retained earnings: A) a deficit in retained earnings is shown in parentheses. B) net income flows from the balance sheet to retained earnings. C) a.
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31) ________ will be increased when a company receives cash before performing the services. A) Prepaid Rent B) Accumulated Depreciation C) Unearned Sales Revenue D) Accrued Sales 32) The book value of a plant asset is the: A) accumulated depreciation less the cost of the asset. B) cost of the asset. C) balance in the accumulated depreciation account. D).
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6) The statement of cash flows is organized in terms of the organization's operating, investing, and financing activities. 7) The amount of cash received on the sale of the company's stock in excess of par value is called retained earnings. 8) The income statement measures operating performance. 9) All financial statements are as.
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31) Which of the following is a correct numbering system for a chart of accounts? A) Accounts payable is numbered 153. B) Utilities expense is numbered 487. C) Accounts receivable is numbered 104. D) Sales revenue is numbered 809. 32) Which account has a normal debit balance? A) Salaries payable B) Common Stock C) Advertising Expense D) Service revenue 33).
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33) Lucy Morton opened an engineering office and titled the business Engineering Enterprises P.C. During its first month of operations, it completed the following transactions: I.Lucy invested $30,000 in the business, which in turn issued common stock to her. II.The business purchased equipment on account for $6,000. II.The business provided engineering services on.
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56) Continuing negative cash flow from which of the following activities can lead to bankruptcy? A) Equity activities B) Operating activities C) Financing activities D) Investing activities 57) Which of the following would be considered a financing activity that decreases cash? A) The company pays a long-term loan. B) The company sells common stock. C) The company purchases.
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3) Generally companies will prepare financial statements: A) after every transaction. B) only when both the balance sheet and income statement are affected. C) at the end of the accounting period. D) at the close of every business day. 4) When services are performed on account: A) cash is increased. B) revenue will not be recorded until.
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46) Accumulated depreciation is normally associated with which asset on the Balance Sheet? A) Inventory B) Accounts receivable C) Land D) Property, plant and equipment 47) The most liquid of current assets, in order, are: A) accounts receivable, inventory, cash and cash equivalents. B) cash and cash equivalents, accounts receivable, marketable securities. C) cash and cash equivalents, marketable.
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21) Which accounts are increased by debits? A) Cash and accounts payable B) Salaries expense and common stock. C) Accounts receivable and utilities expense D) Accounts payable and service revenue 22) An account is increased by a debit and has a debit balance. This account is: A) an expense account. B) a liability account. C) an asset account. D).
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26) Which financial statement is dated at the moment in time when the accounting period ends? A) Balance sheet B) Income statement C) Statement of retained earnings and income statement D) Statement of cash flows 27) The income statement: A) is not dated. B) must cover only a month in time. C) covers a defined period of time. D).
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2.5   Learning Objective 2-5 1) When preparing a journal entry, debits are always listed before credits. 2) The ledger is the book of original entry. 3) Information is taken from the ledger and the posted to the journal. 4) The total debits to an account must equal the total credits to the account. 5) In.
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16) When preparing a company's income statement: A) commonly controlled corporations cannot combine all of their revenues and expenses and report them as one total. B) the statement is prepared as of a specific date. C) the term "other" generally notes that the amount is not sufficiently material to label it separately. D) expenses.
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71) On November 1, Phillips Tool and Die Company paid six months' insurance in advance totaling $9,000. An adjusted trial balance prepared on December 31 would include a balance in the Prepaid Insurance account of: A) $0. B) $3,000. C) $6,000. D) $9,000. 72) The balance in the Accumulated Depreciation — Machine account at the.
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21) Every adjusting entry must affect both the income statement and the balance sheet. 22) Adjusting entries are: A) not needed under the accrual basis of accounting. B) prepared at the option of the accountant. C) prepared at the beginning of the accounting period to update all accounts. D) prepared at the end of the.
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3.3   Learning Objective 3-3 1) In an unadjusted trial balance, the accounts are not yet ready for the preparation of the company's financial statements. 2) Accounts Receivable and Common Stock are accounts that need to be adjusted at the end of the period. 3) Certain accounts do not need to be adjusted at.
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31) The entry to record the purchase of supplies on account would include a debit to: A) Supplies. B) Accounts Payable. C) Supplies Expense. D) Retained Earnings. 32) A transaction that would include a debit to Cash is: A) the purchase of supplies on account. B) the payment of an account payable. C) the collection of cash from.
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5) Income statement data appears as revenues and expenses under Retained Earnings. 6) A record of all the changes in a particular asset, liability, or stockholders' equity during a period is called a(n): A) transaction. B) trial balance. C) journal. D) account. 7) Which of the following is a liability account? A) Retained Earnings B) Accrued Liabilities C) Accounts.
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44) Below is the trial balance for Puff Toys. Puff Toys Trial Balance December, 31, 2012 Account   Debit   Credit Cash       5,000 Accounts Receivable       2,000 Equipment      4,000 Accounts Payable      3,000 Taxes Payable      2,000 Common Stock     3,000 Sales Revenue     7,000 Rent Expense       2,000 Salary Expense       3,000      Totals    14,000   17,000 When trying to determine why the trial balance does not balance, it was discovered that: 1.Several of the.
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12) Atlas, Inc. has the following assets, liabilities, revenues and expenses for the current year. The accounts are listed below in alphabetical order. The company has a December 31, 2012 year end. Accounts receivable$28,000Office equipment$59,500 Accounts payable37,000Office supplies5,000 Building45,000Service revenue130,000 Cash80,000Supplies expense 8,000 Commission expense20,500Utilities expense8,500 Common stock22,000Wage expense11,500 Interest payable1,500 Land40,000 Beginning retained earnings was $120,000 and dividends.
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11) When analyzing a transaction, first pinpoint the effects, if any, on cash. 12)  Posting accounting transactions avoids the necessity of journalizing transactions. 13) The journal is also known as the book of original entry. 14) Accounting transactions are initially recorded in the: A) T-account. B) ledger. C) journal. D) financial statements. 15) The journalizing process involves all.
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39) Sabre Company began business in June and completed the following transactions: A) Received $30,000 cash and issued common stock to the stockholders. B) Purchased supplies for $500, and equipment for $2,000 on account. C) Paid $2,000 monthly rent for office space. D) Performed services for a customer and billed the customer $4,500. E) Paid.
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87) For the year ended, December 31, 2012, the Acme Chemical Company omitted the following adjusting journal entries in error. For each entry, indicate if net income will be overstated or understated by placing an "X" in the appropriate box. JOURNAL ENTRY OMITTED NET INCOME NET INCOME OVERSTATED UNDERSTATED 1. Revenue previously recorded as.
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51) Which of the following is NOT a correct statement about adjusting entries? A) Every adjusting entry affects cash. B) Every adjusting entry affects the balance sheet. C) Every adjusting entry affects net income. D) Every adjusting entry must balance. 52) The adjustment for an accrued expense: A) increases expenses and decreases assets. B) increases expenses and.
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31) Proprietorships and partnerships: A) have the same equity accounts as a corporation. B) identify paid-in capital and common stock separately. C) use a single heading for their equity account called Capital. D) do not have equity accounts. 32) Dividends: A) are paid by a business to shareholders as compensation for services. B) affect net income. C) are.
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3.1   Learning Objective 3-1 1) Accounting can be based on either the cash basis or the accrual basis. 2) Equity is increased when company makes a sale, not when the company collects the cash. 3) The transaction to record a cash sale will be the same under the accrual and cash-basis of accounting. 4).
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3.2   Learning Objective 3-2 1) The revenue principle determines when to record revenue and the amount of revenue to record. 2) The revenue principle states that revenue should be recorded in the same period as the cash is received. 3) In the retail industry, income is recognized under IFRS when the cash is.
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11) To see how a transaction affects a business, managers must first enter the transaction in the journal. 12) The financial statements can be prepared from the information on the trial balance. 13) The normal balance of an expense account is a ________ because expenses decrease ________. A) debit, assets B) debit, expenses C) debit,.
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23) Receiving a payment from a customer on account: A) increases stockholders' equity. B) has no effect on total assets. C) decreases stockholders' equity. D) decreases liabilities. 24) Which of the following transactions would decrease an asset and decrease stockholders' equity? A) The payment of an account payable B) The performance of a service for a client.
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