1. A record of the increases and decreases in a specific asset, liability, equity, revenue, or
expense is a(n):
C. Trial balance.
E. Chart of accounts.
2. Which of the following statements is correct?
A. When a future expense is paid in advance, the payment is normally recorded in a liability
account called Prepaid Expense.
Promises of future payment are called accounts receivable.
C. Increases and decreases in cash are always recorded in the owner's capital account.
D. An account called Land is commonly used to record increases and decreases in both the land
and buildings owned by a business.
E. Accrued liabilities include accounts receivable.
3. A collection of all accounts and their balances used by a business is called a:
B. Book of original entry.
C. General Journal.
D. Balance column journal.
4. Hal Smith opened Smith's Repairs on March 1 of the current year. During March, the
following transactions occurred and were recorded in the company's books:
Smith invested $25,000 cash in the business.
2. Smith contributed $100,000 of equipment to the business.
3. The company paid $2,000 cash to rent office space for the month.
4. The company received $16,000 cash for repair services provided during March.
5. The company paid $6,200 for salaries for the month.
6. The company provided $3,000 of services to customers on account.
7. The company paid cash of $500 for monthly utilities.
8. The company received $3,100 cash in advance of providing repair services to a customer.
9. Smith withdrew $5,000 for his personal use from the company.
Based on this information, net income for March would be: