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Question 3

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Which of the following is the correct order of the steps in the accounting cycle?

Select one:

A. Report, analyze, close, record, and adjust

B. Adjust, report, analyze, record, and close

C. Record, report, analyze, adjust, and close

D. Analyze, record, adjust, report, and close

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Cash collected on accounts receivable would produce what effect on the balance sheet?

Select one:

A. Decrease assets and decrease liabilities

B. Decrease liabilities and increase equity

C. Increase assets and decrease assets

D. Increase liabilities and decrease equity

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Which of the following is one effect of a purchase of $600 of supplies on credit?

Select one:

A. It would decrease retained earnings $600

B. It would decrease liabilities by $600

C. It would increase liabilities by $600

D. It would decrease cash assets by $600

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An economic event that requires accounting recognition defines:

Select one:

A. The cost principle

B. An income statement

C. An asset

D. An accounting transaction

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Which of the following does not affect stockholders' equity?

Select one:

A. Purchasing equipment with payment due in 30 days

B. Receiving an investment of cash from an owner

C. Selling goods to customers with payment due in 30 days

D. Paying wages to employees

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Which of the following decreases stockholders' equity?

Select one:

A. Paying monthly rent in cash

B. Issuing shares of stock

C. Paying cash to settle an account payable

D. Purchasing equipment for cash

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The declaration and payment of a dividend by a corporation causes:

Select one:

A. A decrease in assets and a decrease in retained earnings

B. A decrease in assets and a decrease in liabilities.

C. A decrease in assets and an increase in retained earnings

D. A decrease in assets and a decrease in common stock

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The normal balance of an account is:

Select one:

A. The side on which increases are recorded

B. The debit side

C. The credit side

D. The side on which decreases are recorded

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Question 11

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Which of the following accounts normally has a credit balance?

Select one:

A. Notes Payable

B. Dividends

C. Rent Expense

D. Accounts Receivable

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Which of the following accounts normally has a debit balance?

Select one:

A. Service Fees Earned

B. Accounts Payable

C. Common Stock

D. Dividends

Answer 1

PART 3

C. Record, report, analyze, adjust, and close.

PART 4

C. Increase assets and decrease assets. (When cash is collected on account receivable, cash account increases and Account receivable account decreases. Both cash and accounts receivable are assets)

PART 5

C. It would increase liabilities by $600 (When goods are purchased for credit, the liability increases)

PART 6

D. An accounting transaction (An accounting transaction is an economic event that requires accounting recognition)

PART 7

A. Purchasing equipment with payment due in 30 days ( When equipments are purchased, Equipment account(asset) increases and Payable Account(Liability) increases and hence, there would be no effect on stockholder’s equity.

PART 8

A. Paying monthly rent in cash (When rent is paid in cash, an expense is raised and it results in reduction of retained earnings, which in turns reduces stockholder’s equity.)

PART 9

A. A decrease in assets and a decrease in retained earnings (It decreases cash and retained earnings)

PART 10

A. The side on which increases are recorded

PART 11

A. Notes Payable (Liabilities generally have credit balance)

PART 12

D. Dividends (Expenses generally have debit balance)