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Exam 2: The Accounting Information System

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Question 31

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Which of the following accounts has a debit balance?

A) Accounts Payable.
B) Unearned Revenue.
C) Service Revenue.
D) Salaries Expense.

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Question 32

Multiple Choice

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Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January 11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin's accounting equation from the collection of cash?

A) No net effect to the accounting equation.
B) Decrease assets and increase liabilities.
C) Increase assets and increase liabilities.
D) Decrease assets and decrease liabilities.

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Question 33

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A company provides services to customers on account for $2,400. Indicate the amount of increases and decreases in the accounting equation.

Which one of the following accounts will have a credit balance?

Dividends normally carry a _______ balance and are shown in the _________.

On July 7, 2012, Saints Inc. received $10,000 in cash from a customer for services to be provided on October 10, 2012. Which of the following describes how the transaction should be recorded on July 7, 2012?

Record the following transactions. If an entry is not required, state "No Entry." (a) Started business by issuing 10,000 shares of common stock for $20,000. (b) Hired Rebecca as an administrative assistant, promising to pay her $2,000 every two week. (c) Rented a building for three years at $500 per month and paid six months' rent in advance. (d) Purchased equipment for $5,400 cash. (e) Purchased $1,800 of supplies on account. (f) Provided services to customers for $7,800 cash. (g) Paid employee salaries, $5,200. (h) Paid for supplies purchased in item (e). (i) Paid $800 for current advertising in a local newspaper. (j) Paid utility bill of $1,300 for the current month.

Assume that Sallisaw Sideboards, Inc. had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Purchased equipment and paid cash, $4,300. Paid April rent, $800. Paid workers salaries for April, $700. What was Sallisaw's retained earnings balance at the end of April?

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?

Consider the following list of accounts: $\begin{array} { l l } \text { Cash } & \text { Retained Earnings } \\\text { Service Revenue } & \text { Utilities Expense } \\\text { Salaries Expense } & \text { Accounts Receivable } \\\text { Accounts Payable } & \text { Common Stock } \\\text { Equipment } & \text { Dividends }\end{array}$ How many of these accounts have a normal debit balance?

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

Following are transactions of Gotebo Tanners, Inc., a new company, during the month of January 2012: 1. Issued 10,000 shares of common stock for $15,000 cash. 2) Purchased land for $12,000, signing a note payable for the full amount. 3) Purchased office equipment for $1,200 cash. 4) Received cash of $14,000 for services provided to customers during the month. 5) Purchased $300 of office supplies on account. 6) Paid employees $10,000 for their first month's salaries. How many of these transactions decreased Gotebo's total assets?

For each of the following accounts, indicate whether we use a debit or a credit to increase the balance of the account. (a) Accounts Receivable (b) Accounts Payable (c) Salaries Expense (d) Service Revenue (e) Supplies (f) Common Stock (g) Advertising Expense (h) Dividends

Unearned Revenue is a liability account.

Which of the following would increase assets and increase liabilities?

Purchasing office equipment on account has what impact on the accounting equation?

Incurring an expense for advertising on account would be recorded by:

Tomlin & Company provides music for special occasions. On January 14, the Smith family hired Tomlin for an upcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May 23. As part of the agreement, the Smiths paid Tomlin half of the fee at the end of April with the remaining amount due by the end of June. How would Tomlin record the receipt of the final payment in June?

A company received a utility bill of $600 but did not pay it. Indicate the amount of increases and decreases in the accounting equation.

A company pays $1,300 on account for supplies previously purchased on account. Indicate the amount of increases and decreases in the accounting equation.