(TCO 2) When a business purchases land on account (Points : 3) both assets and stockholders' equity are increased. assets are decreased and stockholder's equity is increased. both assets and liabilities are increased. assets are increased and liabilities are decreased. Question 2. 2. (TCO 2) Which of the following transactions will increase Stockholders' Equity? (Points : 3) The company pays a dividend to its shareholders. The company issues common stock to new shareholders. The president of the company buys a new personal automobile. The company makes a payment on account. Question 3. 3. (TCO 2) When a company pays an amount it owes a creditor (Points : 3) assets are decreased and net income is decreased. assets are decreased and liabilities are increased. liabilities are decreased and net income is increased. assets are decreased and liabilities are decreased. Question 4. 4. (TCO 2) Which of the following is a true statement regarding T-accounts? (Points : 3) The transaction needs to be analyzed to determine which accounts are affected before entering amounts in the T-accounts. If a company pays cash, an amount would be entered on the left side of the T-account. T-accounts are only used to record complex transactions. To debit an asset, an amount is entered on the left side of the T-account and to debit a liability an amount is entered on the right side of the T-account. Question 5. 5. (TCO 2) Which accounts are increased by debits? (Points : 3) Cash and accounts payable Salaries expense and common stock Accounts receivable and utilities expense Accounts payable and service revenue Question 6. 6. (TCO 2) Accounting transactions are initially recorded in the (Points : 3) T-account. ledger. journal. financial statements. Question 7. 7. (TCO 3) Under accrual accounting, the impact of a business transaction is recorded (Points : 3) as it occurs. when cash is received or paid. at the end of the accounting period. only if the amount of the transaction is material. Question 8. 8. (TCO 3) The revenue principle requires that a business record revenue when the business (Points : 3) receives an order from a customer. prepares the invoice for the customer. delivers goods or services to a customer. receives payment from a customer. Question 9. 9. (TCO 3) The balance sheet reports (Points : 3) assets, liabilities and stockholders' equity. the changes in retained earnings. assets, liabilities, revenues and expenses. revenues and expenses. Question 10. 10. (TCO 3) After the closing entries are prepared (Points : 3) all asset accounts will have a zero balance. the Retained Earnings account will have the correct ending balance. the temporary accounts will have debit balances. all liability accounts will have a zero balance