Chapter 2 (major review)

Which of the following transactions causes an increase in total assets

• Pay employee salaries for the current month

• Pay dividends to stockholders

• Issue common stock in exchange for cash

• Purchase office equipment for cash

Which of the following transactions causes an increase in stockholders' equity?

• Pay dividends to stockholders.

• Obtain cash by borrowing from a local bank

• Provide services to customers on account

• Purchase advertising on a local radio station

If a company has an increase in total revenues of $10,000, which of the following is possible?

• Total assets increase by $10,000

• Total liabilities increase by $10,000

• Total stockholder's equity decreases by $10,000

• Either b or c

Which of the following causes the accounting equation not to balance?

• increase assets; increase liabilities

• decrease assets; increase expenses

• increase assets; increase stockholders' equity

• decrease assets; increase revenues

A debit is used to increase which of the following accounts?

• Utilities expense

• Accounts payable

• Service revenue

• Common stock

a credit is used in to increase which of the following accounts?

• Dividends

• Insurance Expense

• Cash

• Service revenue

• deferred revenue

What is the impact on the accounting equation for the following scenario?: Company receives $400 from customers who previously purchased products on account

_______ (cash) increases, while assets (accounts receivable) decrease, causing a net effect on the assets account.

What is the impact on the accounting equation for the following scenario?: A company pays 6 months of rent in advance, $5,000

A company purchases supplies.

How would this transaction be recorded?

• debit to cash; credit to supplies expense

• debit to supplies; credit to cash

• debit cash; credit supplies

• debit supplies expense; credit cash

Dunder Mifflin pays the utility bill for their offices for the current month.

How would this transaction be recorded

• Debit cash; Credit utilities payable

• Debit Utilities Expense; Credit Utilities Payable

• Debit Utilities expense; Credit cash

• Debit Utilities Payable; Credit cash