Practice Exam 1 Chapter 2

Practice Exam 1 Chapter 2 - Practice Exam 1 Chapter 2...

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Practice Exam 1 Chapter 2 Summer 2011 Matching Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) a. Debit b. Credit ____ 1. Income Tax Expense ____ 2. Accounts Payable ____ 3. Retained Earnings ____ 4. Prepaid Insurance ____ 5. Service Revenues ____ 6. Notes Payable ____ 7. Intangibles ____ 8. Common Stock ____ 9. Dividends ____ 10. Unearned Revenues Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 11. The purchase of office equipment on credit has what effect on the accounting equation? a. Assets and stockholders' equity decrease b. Liabilities increase and stockholders' equity decreases c. Assets and liabilities increase d. Assets and liabilities decrease ____ 12. The payment of employee salaries has what effect on the accounting equation? ____ 13. During March, Connor Corp. purchased supplies for cash. The supplies will be used in April. What effect does this transaction have on the accounting equation at the time the supplies are purchased?
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____ 14. Bellarim Corp. made cash sales to customers. What effect does this transaction have on the accounting equation? ____ 15. Clay and Lora each invest $15,000 in a Deyer, Inc. and are given shares of stock as evidence of their ownership interest. What effect does this transaction have on the accounting equation of Deyer? a. Assets and liabilities increase. b. Assets and contributed capital increase. c. Liabilities increase and retained earnings decrease. d. Assets and liabilities decrease. ____ 16. Which of the following best describes one effect of recognizing expenses incurred by a business entity? ____
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