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? a. Assets and stockholders' equity decrease b. Liabilities and stockholders' equity decrease c. Assets decrease and liabilities increase d. Assets increase and liabilities decrease ____ 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? a. Assets increase and stockholders' equity decreases b. Assets and liabilities increase c. There is no effect on the accounting equation, as one asset account increases while another asset account decreases. d. There is no effect on the accounting equation, as the transaction should not be recognized until April.
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____ 14. Bellarim Corp. made cash sales to customers. What effect does this transaction have on the accounting equation? a. Liabilities and retained earnings increase. b. Assets and liabilities increase. c. Assets and retained earnings increase. d. There is no effect on the accounting equation, as one asset account increases while another asset account decreases. ____ 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? a. Assets will increase. b. Liabilities will decrease. c. Contributed capital will increase. d. Retained earnings will decrease. ____ 17. The chronological record in which transactions are initially recorded in the order in which they occur is called a(n) a. T-account b. Chart of Accounts c. Trial Balance d. Journal ____ 18. A list of all active accounts and their balances at a particular date, which is used to prove the equality of debits and credits, is a a. Chart of accounts b. General ledger
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This note was uploaded on 10/14/2011 for the course ECON 101 taught by Professor Daniels during the Spring '11 term at Texas State.

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

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