Question 1

Issuance of common stock for cash would be recorded by a ________.
A)credit to Retained Earnings
B)credit to Common Stock
C)debit to Investments
D)credit to Revenues

Accepted Answer

Issuance of common stock for cash involves the selling of ownership shares in the company to investors. The cash received is recorded as an increase in the company's assets and the corresponding increase in equity is recorded as a credit to Common Stock. Retained Earnings, Investments, and Revenues are not affected by the issuance of common stock for cash.

Question 2

A revenue account has a normal debit balance.

Accepted Answer

A revenue account has a normal credit balance, not a debit balance. This is because revenue represents inflows of economic resources, increasing the owner's equity or the company's net income.

Question 3

Atlas Corporation sold a used machine for less than its carrying value.This transaction is a(n)________.
A)revenue
B)expense
C)gain
D)loss

Accepted Answer

When a company sells a fixed asset, such as a machine, for less than its carrying value, it results in a loss. A loss is recognized as a separate line item on the income statement and is part of the calculation of the net income (or net loss) for the period. The other options (revenue, expense, and gain) do not apply in this scenario.

Question 4

The normal balance of a liability account is a debit.

Accepted Answer

The normal balance for a liability account is a credit, not a debit.

Question 5

Cameron Diaz Corporation purchased a computer system for $20,000.The company paid $5,000 cash and issued a $15,000 note payable for the entire balance.The journal entry to record this transaction includes a(n)________.
A)debit to Equipment for $20,000
B)credit to Accounts Payable for $15,000
C)debit to Expense for $20,000
D)credit to Cash for $20,000

Accepted Answer

The journal entry to record the purchase of a computer system for $20,000 with $5,000 cash and a $15,000 note payable would be a debit to Equipment for $20,000 (the full cost of the equipment). There is no credit to Accounts Payable (since it was not used to purchase the equipment), no debit to Expense (since equipment is classified as an asset, not an expense), and no credit to Cash for $20,000 (since only $5,000 was paid in cash).

Question 6

Jackson Company sold land that had been held for future plant expansion for more than its carrying value.This transaction is a(n)________.
A)revenue
B)expense
C)gain
D)loss

Accepted Answer

The transaction resulted in a gain for Jackson Company, as they sold the land for more than its carrying value. A gain is a type of income that increases the company's equity, so it is not an expense or a loss.

Question 7

Bay City Corporation received $21,000 for 12 months rent in advance.What entry is used to record this transaction?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Bay City Corporation received $21,000 for 12...

Question 8

Murphy Corporation engaged in the following transactions during the month of February.Please analyze these transactions indicate whether they cause an increase (+)or decrease (-)in the balance sheet and income statement accounts.

Accepted Answer

The answer of Murphy Corporation engaged in the following transactions...

Question 9

Which of the following accounts has a normal credit balance?
A)Accounts Receivable
B)Taxes Payable
C)Patents
D)Equipment

Accepted Answer

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

Question 10

The normal balance of an account is the side on which an increase in the account balance is recorded.

Accepted Answer

The normal balance of an account refers to whether the account is increased or decreased on the left or right side of the accounting equation. If an account is normally increased on the left side (debit side), then it has a debit balance. On the other hand, if an account is normally increased on the right side (credit side), then it has a credit balance. It is important to know the normal balance of each account in order to properly classify and record transactions.

Question 11

Each of the following accounts has a normal credit balance except ________.
A)Sales Revenue
B)Accumulated Depreciation
C)Investments
D)Accounts Payable

Accepted Answer

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

Question 12

Smith Corporation purchased $65,000 of merchandise on credit.The company uses the perpetual method of recording inventory purchases.What would be the correct journal entry to record the purchase?
A) 
B) 
C) 
D)

Accepted Answer

The answer of Smith Corporation purchased $65,000 of merchandise on...

Question 13

The balance in the common stock account is increased by a credit.

Accepted Answer

The common stock account is a part of the equity section of the balance sheet and is typically increased by credits. When shares of common stock are sold, the company receives cash, and the common stock account is credited to record the increase in equity.

Question 14

Jones Company sold merchandise on account for $90,000.This merchandise cost $52,000.The company uses the perpetual method of accounting for inventory.What would be the correct journal entry to record the transaction?
A) 
B) 
C) 
D)

Accepted Answer

The journal entry to record the sale on account would be to debit Accounts Receivable for $90,000 and credit Sales for $90,000. To record the cost of goods sold, we would debit Cost of Goods Sold for $52,000 and credit Inventory for $52,000. Therefore, the correct journal entry is to debit Accounts Receivable for $90,000, credit Sales for $90,000, debit Cost of Goods Sold for $52,000, and credit Inventory for $52,000. This is option B.

Question 15

Which of the following accounts has a normal credit balance?
A)Interest Expense
B)Deferred Revenue
C)Investments
D)Loss on Sale of Equipment

Accepted Answer

Deferred Revenue is a liability account that represents money received from customers for goods or services that have not yet been provided. It has a credit balance because it represents an obligation that the company owes to its customers.

Question 16

Which of the following accounts has a normal debit balance?
A)Accounts Payable
B)Advertising Expense
C)Gain on Sale of Assets
D)Retained Earnings

Accepted Answer

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

Question 17

Helmsley Corporation received one year's rent in advance on a warehouse.This transaction is a(n)________.
A)expense
B)liability
C)asset
D)revenue

Accepted Answer

Receiving rent in advance creates a liability for Helmsley Corporation, as they owe the tenant the use of the warehouse for the period covered by the advance payment.

Question 18

List and define the elements of the accounting equation.

Accepted Answer

The answer of List and define the elements of the...

Question 19

ABC Corporation issued common stock to its investors for $125,000.The journal entry to record this transaction includes a(n)________.
A)debit to Investments
B)credit to Revenue
C)credit to Common Stock
D)debit to Expense

Accepted Answer

The issuance of common stock involves raising capital by selling ownership stakes in the company to investors. The journal entry to record this transaction includes a credit to Common Stock, as this represents the value of the stock being issued. There is no debit to Investments, Revenue or Expense in this scenario.

Question 20

All of the following accounts has a normal debit balance except ________.
A)Dividends
B)Loss on Sale of Land
C)Additional Paid in Capital
D)Land

Accepted Answer

Additional Paid in Capital is a permanent equity account that is increased by credits and decreased by debits. Therefore, it has a normal credit balance.

Quiz 4: Review of the Accounting Cycle

Issuance of common stock for cash would be recorded by a ________.

A revenue account has a normal debit balance.

Atlas Corporation sold a used machine for less than its carrying value.This transaction is a(n) ________.

The normal balance of a liability account is a debit.

Cameron Diaz Corporation purchased a computer system for $20,000.The company paid $5,000 cash and issued a $15,000 note payable for the entire balance.The journal entry to record this transaction includes a(n) ________.

Jackson Company sold land that had been held for future plant expansion for more than its carrying value.This transaction is a(n) ________.

Bay City Corporation received $21,000 for 12 months rent in advance.What entry is used to record this transaction?

Murphy Corporation engaged in the following transactions during the month of February.Please analyze these transactions indicate whether they cause an increase (+)or decrease (-)in the balance sheet and income statement accounts.

Which of the following accounts has a normal credit balance?

The normal balance of an account is the side on which an increase in the account balance is recorded.

Each of the following accounts has a normal credit balance except ________.

Smith Corporation purchased $65,000 of merchandise on credit.The company uses the perpetual method of recording inventory purchases.What would be the correct journal entry to record the purchase?

The balance in the common stock account is increased by a credit.

Jones Company sold merchandise on account for $90,000.This merchandise cost $52,000.The company uses the perpetual method of accounting for inventory.What would be the correct journal entry to record the transaction?

Which of the following accounts has a normal credit balance?

Which of the following accounts has a normal debit balance?

Helmsley Corporation received one year's rent in advance on a warehouse.This transaction is a(n) ________.

List and define the elements of the accounting equation.

ABC Corporation issued common stock to its investors for $125,000.The journal entry to record this transaction includes a(n) ________.

All of the following accounts has a normal debit balance except ________.