Question 1

At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017?
A)$423,000 debit
B)$24,000 credit
C)$426,000 credit
D)$441,000 credit

Accepted Answer

The balance in Retained Earnings is calculated by adding net income and subtracting dividends from the beginning Retained Earnings. Net income is revenues minus expenses, which is $60,000 - $36,000 = $24,000. The new Retained Earnings is $423,000 + $24,000 - $6,000 = $441,000.

Question 2

At September 1, 2017, Kern Enterprises reported a cash balance of $140,000. During the month, Kern collected cash of $60,000 and made disbursements of $100,000. At September 30, 2017, the cash balance is
A)$40,000 credit.
B)$100,000 credit.
C)$200,000 debit.
D)$100,000 debit.

Accepted Answer

Starting cash balance = $140,000
Cash collected during the month = $60,000
Cash disbursements during the month = $100,000

Therefore, the ending cash balance can be calculated as:
Starting cash balance + Cash collected - Cash disbursements
= $140,000 + $60,000 - $100,000
= $100,000 debit

So, the correct answer is D: $100,000 debit.

Question 3

In recording accounting transactions, evidence that a transaction has taken place is obtained from
A)source documents.
B)the Internal Revenue Service.
C)the public relations department.
D)the Securities and Exchange Commission.

Accepted Answer

Source documents provide evidence that a transaction has taken place, such as invoices, receipts, and bank statements. The other options listed are not directly involved in providing evidence of accounting transactions.

Question 4

After a business transaction has been analyzed and entered in the journal, the next step in the recording process is to transfer the information to
A)the company's bank.
B)stockholders' equity.
C)ledger accounts.
D)financial statements.

Accepted Answer

The information recorded in the journal needs to be transferred to the appropriate accounts in the ledger, as this is where all of the company's financial transactions are kept. From there, the balances can be summarized and used to prepare the financial statements, which provide a picture of the company's financial performance and position. Choosing A, B, or D would not be the next step in the recording process after analyzing and journalizing a transaction.

Question 5

On June 1, 2017, England Inc. reported a cash balance of $42,000. During June, England made deposits of $16,000 and made disbursements totaling $48,000. What is the cash balance at the end of June?
A)$10,000 credit balance
B)$58,000 debit balance
C)$10,000 debit balance
D)$6,000 credit balance

Accepted Answer

Starting cash balance = $42,000
Deposits made = $16,000
Disbursements (withdrawals) made = $48,000
Ending cash balance = Starting cash balance + Deposits made - Disbursements made
= $42,000 + $16,000 - $48,000
= $10,000 debit balance (negative sign indicates a debit balance)

Question 6

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be
A)$0.
B)$6,800 credit.
C)$4,800 credit.
D)$2,000 debit.

Accepted Answer

Retained Earnings = Net Income - Dividends
Retained Earnings = $6,800 - $2,000
Retained Earnings = $4,800 credit

Question 7

The first step in the recording process is to
A)prepare financial statements.
B)analyze the transaction in terms of its effect on the accounts.
C)post to a journal.
D)prepare a trial balance.

Accepted Answer

The first step in the recording process is to analyze the transaction in terms of its effect on the accounts. This involves identifying the accounts affected by the transaction and determining whether the transaction will increase or decrease the account balances. Only after this analysis can the transaction be recorded in the appropriate accounts. Preparation of financial statements, posting to a journal and preparation of a trial balance are subsequent steps in the recording process.

Question 8

All of the following statements regarding the double-entry system are true except
A)a two-sided effect of each transaction is recorded in appropriate accounts when using the double-entry system.
B)the double-entry system provides a logical method for recording transactions.
C)both sides of the accounting equation must be affected when recording a transaction using the double-entry system.
D)when using the double-entry system, the sum of all debits to the accounts must equal the sum of all credits.

Accepted Answer

The answer of All of the following statements regarding the...

Question 9

The usual sequence of steps in the transaction recording process is
A)journalize, analyze, post to the ledger.
B)analyze, journalize, post to the ledger.
C)journalize, post to the ledger, analyze.
D)post to the ledger, journalize, analyze.

Accepted Answer

The answer of The usual sequence of steps in the...

Question 10

Which of the following accounts has a normal debit balance?
A)Accounts Payable
B)Prepaid Rent
C)Retained Earnings
D)Common Stock

Accepted Answer

Prepaid Rent is an asset account and assets have a normal debit balance. Accounts Payable and Retained Earnings are both equity accounts (liability and equity accounts have normal credit balances), and Common Stock is also an equity account but it is not an account that would have a debit or credit balance.

Question 11

At December 1, 2017, Orear Company's Accounts Receivable balance was $16,800. During December, Orear had credit sales of $45,000 and collected accounts receivable of $36,000. At December 31, 2017, the Accounts Receivable balance is
A)$16,800 debit
B)$25,800 debit
C)$61,800 debit
D)$25,800 credit

Accepted Answer

To find the ending balance of accounts receivable, we need to add the credit sales to the beginning balance and then subtract the collections made during the month. 
Beginning balance: $16,800 
Credit sales: $45,000 
Collections: ($36,000) 
Ending balance: $25,800 (debit)

Question 12

During January 2017, Carey Services Inc. paid a cash dividends of $2,000. This transaction
A)reduces stockholders' equity by $2,000.
B)increases stockholders' equity by $2,000.
C)reduces net income by $2,000.
D)increases expenses by $2,000.

Accepted Answer

When a company pays cash dividends, it reduces its retained earnings, which is a component of stockholders' equity. Therefore, option A - "reduces stockholders' equity by $2,000" is the correct answer. Option B is incorrect because paying dividends does not increase stockholders' equity. Options C and D are also incorrect because paying dividends does not affect net income or expenses.

Question 13

During February 2017, its first month of operations, the owner of Schwenn Enterprises invested cash of $100,000. Schwenn had cash sales of $20,000 and paid expenses of $35,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?
A)$15,000 credit
B)$85,000 debit
C)$120,000 debit
D)$65,000 credit

Accepted Answer

The cash balance is calculated by adding the initial investment and cash sales, then subtracting the expenses: $100,000 (investment) + $20,000 (sales) - $35,000 (expenses) = $85,000 debit balance.

Question 14

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is
A)$350,000 debit.
B)$300,000 credit.
C)$275,000 debit.
D)$225,000 credit.

Accepted Answer

The retained earnings at the end of the year is calculated as the beginning retained earnings minus the net loss and dividends paid. $350,000 - $75,000 - $50,000 = $225,000.

Question 15

Which of the following accounts has a normal credit balance?
A)Prepaid Rent
B)Notes Receivable
C)Rent Revenue
D)Rent Expense

Accepted Answer

The answer of Which of the following accounts has a...

Question 16

At February 1, 2017, the balance in Goebel Inc.'s supplies account was $3,500. During February. Goebel purchased supplies of $3,000 and used supplies of $4,000. At the end of February, the balance in the Supplies account should be
A)$3,500 debit.
B)$4,500 credit.
C)$10,500 debit.
D)$2,500 debit.

Accepted Answer

The beginning balance of $3,500 plus purchases of $3,000 equals $6,500. Then, subtracting the supplies used of $4,000 leaves a balance of $2,500. Therefore, the answer is a $2,500 debit.

Question 17

During 2017, its first year of operations, Jane's Bakery had revenues of $130,000 and expenses of $66,000. The business paid cash dividends of $36,000. What is the balance in Retained Earnings at December 31, 2017?
A)$0
B)$36,000 debit
C)$28,000 credit
D)$64,000 credit

Accepted Answer

Retained Earnings is calculated as Revenues minus Expenses minus Dividends. So, $130,000 (Revenues) - $66,000 (Expenses) - $36,000 (Dividends) = $28,000 credit balance in Retained Earnings.

Question 18

At October 1, 2017, Metz Industries had an Accounts Payable balance of $140,000. During the month, the company made purchases on account of $100,000 and made payments on account of $160,000. At October 31, 2017, the Accounts Payable balance is
A)$140,000 debit
B)$20,000 credit
C)$80,000 credit
D)$160,000 credit

Accepted Answer

Starting balance: $140,000 debit
Purchases on account: $100,000 increase (credit)
Payments on account: $160,000 decrease (debit)

To find the ending balance, we need to add the starting balance, purchases on account, and subtract the payments on account:

$140,000 (starting balance) + $100,000 (purchases on account) - $160,000 (payments on account) = $80,000 credit

Therefore, the correct answer is C.

Question 19

Winrow Company showed the following balances at the end of its first year: $$\begin{array} { l r } 
\text { Cash } & \$ 11,000 \
\text { Prepaid insurance } & 500 \
\text { Accounts receivable } & 2,500 \
\text { Accounts payable } & 2,000 \
\text { Notes payable } & 3,000 \
\text { Common stock } & 5,000 \
\text { Dividends } & 500 \
\text { Revenues } & 22,000 \
\text { Expenses } & 12,500
\end{array}$$ What amount did Winrow Company show as total credits?
A)$32,500
B)$32,000
C)$31,500
D)$33,000

Accepted Answer

Total credits include accounts payable, notes payable, common stock, and revenues: $2,000 + $3,000 + $5,000 + $22,000 = $32,000.

Question 20

Barnes Company showed the following balances at the end of its first year: $$\begin{array}{l}
\text { Cash } \quad \$ 14,000\
\begin{array} { l r } 
\text { Prepaid insurance } & 700 \
\text { Accounts receivable } & 3,500 \
\text { Accounts payable } & 2,800 \
\text { Notes payable } & 4,200 \
\text { Common stock } & 5,400 \
\text { Dividends } & 700 \
\text { Revenues } & 29,000 \
\text { Expenses } & 17,500
\end{array}
\end{array}$$ What amount did Barnes Company show as total credits?
A)$42,100
B)$41,400
C)$40,700
D)$42,800

Accepted Answer

The answer of Barnes Company showed the following balances at...

Quiz 3: The Accounting Information System

At September 1, 2017, Baxter Inc. reported Retained Earnings of $423,000. During the month, Baxter generated revenues of $60,000, incurred expenses of $36,000, purchased equipment for $15,000 and paid dividends of $6,000. What is the balance in Retained Earnings at September 30, 2017?

At September 1, 2017, Kern Enterprises reported a cash balance of $140,000. During the month, Kern collected cash of $60,000 and made disbursements of $100,000. At September 30, 2017, the cash balance is

In recording accounting transactions, evidence that a transaction has taken place is obtained from

After a business transaction has been analyzed and entered in the journal, the next step in the recording process is to transfer the information to

On June 1, 2017, England Inc. reported a cash balance of $42,000. During June, England made deposits of $16,000 and made disbursements totaling $48,000. What is the cash balance at the end of June?

During January 2017, its first month of operation, Osborn Enterprises earned net income of $6,800 and paid dividends to the owners of $2,000. At January 31, the balance in Retained Earnings will be

The first step in the recording process is to

All of the following statements regarding the double-entry system are true except

The usual sequence of steps in the transaction recording process is

Which of the following accounts has a normal debit balance?

At December 1, 2017, Orear Company's Accounts Receivable balance was $16,800. During December, Orear had credit sales of $45,000 and collected accounts receivable of $36,000. At December 31, 2017, the Accounts Receivable balance is

During January 2017, Carey Services Inc. paid a cash dividends of $2,000. This transaction

During February 2017, its first month of operations, the owner of Schwenn Enterprises invested cash of $100,000. Schwenn had cash sales of $20,000 and paid expenses of $35,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

At January 1, 2017, Troyer Industries reported Retained Earnings of $350,000. During 2017, Troyer had a net loss of $75,000 and paid dividends to the stockholders of $50,000. At December 31, 2017, the balance in Retained Earnings is

Which of the following accounts has a normal credit balance?

At February 1, 2017, the balance in Goebel Inc.'s supplies account was $3,500. During February. Goebel purchased supplies of $3,000 and used supplies of $4,000. At the end of February, the balance in the Supplies account should be

During 2017, its first year of operations, Jane's Bakery had revenues of $130,000 and expenses of $66,000. The business paid cash dividends of $36,000. What is the balance in Retained Earnings at December 31, 2017?

At October 1, 2017, Metz Industries had an Accounts Payable balance of $140,000. During the month, the company made purchases on account of $100,000 and made payments on account of $160,000. At October 31, 2017, the Accounts Payable balance is