3) Cash Service Revenue Salaries Expense Accounts Payable C Retained Earnings Utilities Expense Accounts Receivable Common Stock Dividends How many of the above accounts have a normal debit balance? A) Six. C) Four D) Seven. 214) For a journal entry with only two lines, the following entry is valid: Increase in Revenue, Decrease in Expense A) True B) False 215) For a journal entry with only two lines, the following entry is valid Increase in Expense, Increase in Dividends. B) True A) False 216) DW has an ending Retained Earnings balance of $$1,100. If during the year DW paid dividends of $4,300 and had net income of $22,500, then what was the beginning Retained Eamings balance? D) $300. B) $69,300. C) $24,300 A) 532,900 217) For a journal entry with only two lines, the following entry is valid: Decrease in a Liability, Decrease in Owners' Equity. B) False A) True 218) The usual balance in a Contra-Dividend account is a: C) DR A) It depends B) CR 219) For a journal entry with only two lines, the following entry is valid: Increase in one Expense, Increase in another Expense A) False B) True 20) The third step in the operating cycle is: C) Purchase D) Collection A) Manufacture B) Sale For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Decrease in a Owners' Equity 1) B) False A) True 30 222) When a company pays cash for equipment, whut is the offect on the accounting equation forthat company? A) No change. B) Increase assets and increase liabilities C) Decrease assets and decrease liabilities D) Increase assets and increase stockholders' equity 223) On September 30, ABC paid employee salaries of $7,000, including $1,00 it owed to its employces last month. What are the effects of this transaction on the accounting equation? A) Expenses increased, liabilities increased, and assets increased B) Assets decreased, expenses decreased, and liabilities increased. C) Assets increased, expenses increased, and liabilities decreased. D) Assets decreased, liabilities decreased, and expenses increased. E) Expenses decreased, liabilities decreased, and assets decreased 224) When a company provides services on account, the accounting equation would be affected as follows A) Revenues increase. B) Assets increase and stockholders' equity increases C) Assets increase and liabilities decrease. D) Assets increase. 225) When a magazine sells one-year subseriptions to customers but receives the full amount of cash immediately, it is an example of a(n): A) Accrued revenue. C) Deferred revenuc. B) Prepaid expense. D) Accrued expense. 226) An alternative form of the accounting equation is A) Net Income- Revenues Expenses. B) Assets- Liabilities- Stockholders' Equity. C) Stockholders' Equity Assets + Liabilities. D) Assets - Liabilities Stocekholders Equity, 227) For which step in the Operating cycle is there a difference between manufacturers and retailers? D) Third A) First B) Fourth C) Second 228) Which of the following is not a balance sheet item? A) Retained Earnings. C) Liabilities. B) Assets. D) Expenses 229) What is usually a better predictor of future cash flow to the firm? B) Past Income A) Past Cash Flows 31 230) In Outsourcing, a firm A) hires a firm to do some work it was doing itself B) incrcase revenue C) increases expenses D) changes accounting firms 231) For a journal entry with only two lines, the following entry is valid Decrease in a liability, Decrease in Revenuc A) False B) Tre 232) GAAP is an abbreviation for A) Generally accepted auditing practices B) Generally applied accounting procedures C) Generally authorized accounting procedures. D) Generally accepted accounting principles. 233) Given the following, stockholders' claims to the company's resources amount to: $1.200,000 $800,000 $100.000 $250,00 Assets Net income Retained carnings D) $250,000. C) S1.200,000. A) $400,000. B) $800.000 234) For a journal entry with only two lines, the following entry is valid Increase in a liability, Increase in Dividends. A) False B) True 235) Receivi ng cash from customers before services are performed results in: A) Prepaid Assets. C) Accounts Receivable. B) Service Revenue. D) Deferred Revenues. 236) The usual balance in a Contra-Asset account is a: A) CR C) It depends B) DR 237) Accounts Receivable are like A) Dead Fish B) a Fine Wine 32 ABC provides music for special occasions. On January 14, the Smith family hired ABC for an pcoming family wedding for an agreed upon fee of $10,000. The wedding was scheduled for May 23. As part of the agreement, the Smiths paid ABC half of the fee at the end of April with the remaining amount due by the end of June. How would ABC record the receipt of the final payment in June? A) Debit to Deferred Revenue. C) Credit to Cash. B) Credit to Service Revenue. D) Credit to Accounts Reccivable. Assume that ABC had a retained earnings balance of $10,000 on April 1, and that the company had the following transactions during April. Issued common stock for cash, $5,000. Provided services to customers on account, $2,000. Provided services to customers in exchange for cash, $900. Purchased equipment and paid cash. $4,300. Paid April rent, $800. Paid employees' salaries for April, $700. What was ABC's retained earnings balance at the end of April? A) S11.400. C) Some other amount. B) S16.400. D) $12,100 240) In a Balanced set of Accounting Records, EVERY Account must balance. A) True B) False 241) During a Sale in the operating cycle, what happens to cash? D) Decreases A) Increases B) Stays the SameC) It depends 42) A company orders office supplies in June. Those supplies are received and paid for in July. The supplies are used in August. In which month should the company record supplies expense? A) August. C) July B) Evenly over the three months. D) June 3) Income in the operating cycle equals A) It depends on the Measuring system. C) Benefit Value Minus Sacrifice Value B) Benefit Value Plus Sacrifice Value D) Sacrifice Value Minus Benefit Value ) For a journal entry with only two lines, the following entry is valid: Decrease in an asset, Increase in Revenue. A) False B) True In Cash Flow reporting Accounts Reccivable is measured at A) It depends on the measuring system C) Benefit Value B) Sacrifice Value D) sO 246) Which of the following are made AFTER the financial statements are prepared? A) Transaction Entries B) Closing Entries C) Adjusting Entries 247) Which of the following is NOT possible for a business transaction? A) Decrease assets and increase expense. B) Increase liabilities and incrcase expense. C) Decrease liabilities and increase revenue. D) Increase assets and decrease revenue 248) ABC had a net income of $8,000, $5,000, $12,000, and S10,000 over the first four years of the company's existence. If the average annual amount of dividends paid over the last four years is S3,000, what is the ending retained earnings balance? A) S35,000. B) S23,000. C) $7,000. D) S47,000. 249) Consider the following transactions Issued common stock for cash. Purchased equipment by signing a note payable. Provided services to customers on account. Collected cash from customers on account. D) Three How many of these four transactions increased the given company's total liabilities? C) Four B) One. A) Two. A) The Statement of Cash Flows always balances B) The Statement of Cash Flows never balances C) It is possible for Balance in Cash on the Statement of Cash Flows to be zere 250) Choose one