ACC 371 Chapter 3 Homework Handout - Fall

ACC 371 Chapter 3 - Chapter 3 Problem 1GP 1 A common business transaction that would not affect the amount of stockholders equity is a b c d

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Chapter 3 Problem 1GP 1. A common business transaction that would not affect the amount of stockholders’ equity is a. signing a note payable to purchase equipment b. payment of property taxes c. billing of customers for services rendered d. payment of dividends 2. On June 30, a company paid $3,600 for insurance premiums for the current year and debited the amount to Prepaid Insurance. At December 31, the bookkeeper forgot to record the amount expired. The omission has the following effect on the financial statements prepared on December 31: a. overstates stockholders’ equity b. overstates assets c. understates net income d. both (a) and (b) 3. Which of the following criteria must be met before an event should be recorded for accounting purposes? a. The event must be an arm’s-length transaction. b. The event must be repeatable in a future period. c. The event must be measurable in financial terms. d. The event must be disclosed in the notes to the financial statements. 4. A routine collection of a customer’s account balance was recorded and posted as a debit to Cash and a credit to Sales Revenue. The journal entry to correct this error
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This note was uploaded on 12/09/2011 for the course ACC 371 taught by Professor Proscott during the Spring '11 term at S. Alabama.

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ACC 371 Chapter 3 - Chapter 3 Problem 1GP 1 A common business transaction that would not affect the amount of stockholders equity is a b c d

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