Question

In: Accounting

Required information [The following information applies to the questions displayed below.] Account No. Account Title (1)...

Required information

[The following information applies to the questions displayed below.]

Account No. Account Title
(1) Cash
(2) Service Revenue
(3) Accounts Receivable
(4) Salaries Expense
(5) Dividends
(6) Common Stock
(7) Salaries Payable
(8) Retained Earnings

Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that appear on that particular financial statement.)

Multiple Choice

  • Account numbers 2, 4, and 5 will appear on the income statement.

  • Account numbers 1, 3, and 8 will appear on the balance sheet.

  • Account numbers 2, 5, and 8 will appear on the statement of cash flows.

  • Account numbers 4, 5, and 6 will appear on the statement of changes in stockholders’ equity.

Required information

[The following information applies to the questions displayed below.]

Account No. Account Title
(1) Cash
(2) Service Revenue
(3) Accounts Receivable
(4) Salaries Expense
(5) Dividends
(6) Common Stock
(7) Salaries Payable
(8) Retained Earnings

Which of the following is a true statement? (Note: A statement may be true even if it does not identify all accounts that have debit balances on that particular financial statement).

Multiple Choice

  • Account numbers 1, 3, and 5 normally have debit balances.

  • Account numbers 2, 4, and 5 normally have debit balances.

  • Account numbers 2, 5, and 8 normally have debit balances.

  • Account numbers 4, 5, and 6 normally have debit balances.

Solutions

Expert Solution

Answer 1: Account number 1, 3 and 8 will appear on the balance sheet.

Explanation: Cash and Accounts Receivable is an asset while Retained Earnings is a liability. Both asset and liabiloties appear in the balance sheet.

Dividend does not appear in the income statement it appears in retained earnings account.

Retained Earnings does not appear in cash flow statement.

Salary Expense does not result into changes in the stockholders' equity.

Answer 2:

Account number 1, 3 and 5 normally have debit balance.

Explanation:

Cash and Accounts Receivable are asset account and therefore have debit balance as Assets have debit balance. The Dividend have debit balance at the time of decleration of the dividend. And at the end of the year it is debited to the retained earnings account to reduce the balance of the retained earnings account.

Service Revenue has credit balance.

Common stock has credit balance.


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