Debit vs. Credit-2

Multiple Choice

Which of the following is a key objective when learning about transaction analysis in financial accounting?

• To recognize different types of business transactions and accounts

• To memorize accounting history

• To avoid using technology in accounting

• To focus only on personal finance

Open Ended

Why is it important for businesses to analyze transactions before recording them in financial accounting?

Multiple Select

Which of the following are considered asset accounts?

• Cash

• Accounts Receivable

• Notes Payable

• Inventory

Multiple Choice

Which of the following best describes Property Plant & Equipment (P/P/E)?

• Long-term assets used in operations to earn revenue, such as land, buildings, and equipment

• Short-term investments held for trading

• Cash and cash equivalents

• Goods the company sells to customers

Open Ended

Describe the difference between Accounts Payable and Notes Payable.

Multiple Choice

Which of the following best describes retained earnings?

• Cumulative net income minus net losses and dividends over the company’s life

• Owners’ investment in the corporation through stock

• Distribution of the company’s earnings to its shareholders

• Increase in stockholders’ equity from delivering goods or services

Open Ended

Explain how revenues and expenses impact stockholders’ equity.

Multiple Select

Which of the following are components of stockholders’ equity as described in the slides?

• Common Stock

• Retained Earnings

• Dividends

• Revenues

Multiple Choice

What is the primary purpose of analyzing the impact of business transactions on the accounting equation?

• To determine how each transaction affects assets, liabilities, and equity

• To calculate the company’s profits

• To prepare tax returns

• To record dividends paid to shareholders

Multiple Choice

In Transaction 1, what is the effect of issuing common stock on the accounting equation for Alladin Travel, Inc.?

• Increase in assets and increase in equity

• Increase in liabilities and decrease in assets

• Decrease in equity and increase in liabilities

• No effect on the accounting equation

Multiple Choice

When a business buys supplies on account, which accounts are affected and how?

• Supplies increase, Accounts Payable increase

• Cash decreases, Supplies increase

• Supplies decrease, Accounts Payable decrease

• Cash increases, Accounts Payable increases

Open Ended

Explain how earning service revenue by providing services for customers impacts the accounting equation.

Multiple Choice

Which of the following accounts are affected when services are performed on account?

• Accounts Receivable and Retained Earnings

• Cash and Supplies

• Accounts Payable and Land

• Common Stock and Cash

Open Ended

Compare the effects on the accounting equation of paying expenses (rent, salaries, utilities) versus paying on account (accounts payable).

Multiple Choice

Why is there 'No Entry' recorded for the transaction where Starr Williams pays $30,000 out of her personal bank account to remodel her home?

• It is a personal transaction, not a business transaction

• The amount is too large to record

• It is an error and should be recorded

• It affects only the company's liabilities

Multiple Choice

When Alladin collects $1,000 from a customer for services previously performed on account, which accounts are affected and how?

• Cash increases by $1,000; Accounts Receivable decreases by $1,000

• Cash decreases by $1,000; Accounts Receivable increases by $1,000

• Cash increases by $1,000; Accounts Payable decreases by $1,000

• Cash increases by $1,000; Supplies decrease by $1,000

Multiple Choice

What is the effect on the accounting equation when Alladin sells land for the same amount it was purchased for?

• Cash increases and Land decreases by the same amount, with no effect on total assets or equity

• Cash increases and Retained Earnings increases by the sale amount

• Land increases and Cash decreases by the sale amount

• Total assets decrease and liabilities increase

Multiple Choice

Alladin Travel, Inc. declares a dividend and pays stockholders $2,100 cash. Which accounts are affected by this transaction?

• Cash and Retained Earnings

• Cash and Common Stock

• Cash and Accounts Payable

• Cash and Supplies

Multiple Choice

Based on the transaction analysis table, which transaction resulted in the largest increase in cash for Alladin Travel, Inc.?

• Issuance of common stock

• Service revenue

• Sale of land

• Collection from customers

Open Ended

How does the payment of dividends affect the statement of retained earnings and the balance sheet for Alladin Travel, Inc.?

Open Ended

How do you think machine learning could change the way accounting and business transactions are analyzed in the future?

Multiple Choice

Which of the following is NOT one of the learning objectives for Chapter 2: Transaction Analysis?

• Recognize a business transaction and the various types of accounts in which it can be recorded

• Analyze the impact of business transactions on the accounting equation

• Construct a trial balance

• Prepare financial statements