1. A debit would make which of the following accounts increase?
   1. Common Stock
   2. Inventory
   3. Notes Payable
   4. Retained Earnings

2. Consider the following journal entry:

Software	18,000
Cash	7,200
Note Payable	10,800

Which of the following explanations best describes this journal entry?

A) The company buys $18,000 of software, pays cash of $7,200, and signs a note for $10,800.

B) The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software.

C) The company buys $18,000 of software, pays $7,200 cash, and promises to cancel a debt owed to the company in the amount of $10,800.

D) The company sells $18,000 of software, receives $7,200 in cash, and pays off $10,800 it owes on the software.

3. Which one of the following is not a current asset?
   1. Cash
   2. Supplies
   3. Equipment
   4. Prepaid Insurance

4. The financial statement that reports revenues and expenses is the:
   1. statement of retained earnings.
   2. income statement.
   3. balance sheet.
   4. statement of cash flows.