Question

How does the purchase of equipment by signing a note affect the accounting equation?

a.assets increase; liabilities increase

b.assets increase; owner's equity increases

c.assets increase; liabilities decrease

d.assets increase; assets decrease

The entry to adjust for the cost of supplies used during the accounting period is

a.debit owner's equity; credit Supplies

b.debit Supplies Expense; credit Supplies

c.debit Supplies; credit owner's equity

d.debit Accounts Payable; credit Supplies

Of the following steps of the accounting cycle, which step should be completed first?

a.Adjusting entries are journalized and posted to the ledger.

b.Transactions are posted to the ledger.

c.Financial statements are prepared.

d.Closing entries are journalized and posted to the ledger.

After net income is entered on the end-of-period spreadsheet, the Balance Sheet Debit and Credit columns must

a.be the same amount as the total amount in the Adjusted Trial Balance Debit and Credit columns

b.equal each other

c.not be equal to each other and need not be the same total amounts as any other pair of columns on the work sheet

d.be the same amount as the total amount of the Income Statement Debit and Credit columns

Answer 1

1. How does the purchase of equipment by signing a note affect the accounting equation?

Answer : a. asset increases, liability increases

Explanation: When asset is purchased, asset value is debited and it increases. Notes payable is debt and it cannot be included in owners equity. The debt is increased thereby liability is increased.

2. The entry to adjust for the cost of supplies used during the accounting period is

Answer : b.debit Supplies Expense; credit Supplies

Explanation: The supplies is an expense and it has to be debited and shown in debit side of income statement. The supplies should be credited for the amount to be paid as liability.

3. Of the following steps of the accounting cycle, which step should be completed first?

Answer : d.Closing entries are journalized and posted to the ledger.

Explanation : The transactions are recorded in journals, the journals are closed first and then posted the ledgers. The adjusting entries are passed and journals get edited, then financial statements are prepared with it.

4. After net income is entered on the end-of-period spreadsheet, the Balance Sheet Debit and Credit columns must

Answer : b.equal each other

Explanation : The balance sheet debit and credit sides are matched when net profit from adjusted trial balance is added to retained earnings in the balance sheet.