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Exam 2: The Accounting Information System

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Question 61

Multiple Choice

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On September 30,MFP Co.paid employee salaries $7,000,including $1,000 it owed to its employees last month.What are the effects of this transaction on the accounting equation?

A) Expenses increased,liabilities increased,and assets increased.
B) Assets decreased,liabilities decreased,and expenses increased.
C) Assets decreased,expenses decreased,and liabilities increased.
D) Expenses decreased,liabilities decreased,and assets decreased.
E) Assets increased,expenses increased,and liabilities decreased.

F) All of the above
G) None of the above

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Question 62

Multiple Choice

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Daniel Dino Restaurant owes workers' salaries of $15,000.This would be recorded as:

A) Debit Salaries Expense,credit Cash.
B) Debit Salaries Payable,credit Cash.
C) Debit Salaries Expense,credit Salaries Payable.
D) Debit Salaries Payable,credit Salaries Expense.

E) A) and B)
F) B) and C)

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Question 63

Multiple Choice

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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.

A company provides services to customers on account,$3,500.Record the transaction.

Expenses have the effect of decreasing retained earnings.

When a company pays utilities of $1,800 in cash,the transaction is recorded as:

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?

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

A company pays $2,000 dividends to its stockholders.Record the transaction.

Purchasing supplies on account increases the balance of the Accounts Receivable account.

When a payment is made on an account payable:

Tyler Incorporated receives $150,000 from investors for issuing them shares of its common stock.Tyler Incorporated records this transaction with a:

A revenue has what effect on the accounting equation?

Styleson Inc.performed cleaning services for its customers for cash.These transactions would be recorded as:

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

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

The Unearned Revenue account is shown in which statement?

Finnish Motors has the following balance sheet accounts: $\begin{array} { l r } \text { Land } & \$ 150,000 \\\text { Equipment } & 90,000 \\\text { Salaries Payable } & 12,000 \\\text { Notes Payable } & 99,000 \\\text { Supplies } & 10,000 \\\text { Cash } & 25,000 \\\text { Common Stock } & 40,000 \\\text { Retained Earnings } & 100,000 \\\text { Accounts Payable } & ? \\\text { Prepaid Rent } & ?\end{array}$ If the company has total liabilities and stockholders' equity of $290,000,what is the balance of the company's Prepaid Rent account?

Record the following transactions for Acme Builders: (a)Purchase office supplies on account,$1,200. (b)Provide services to customers for cash,$2,500. (c)Pay $1,100 in salaries for the current month.

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