Review-Quiz2-Dual Credit Accounting

Amounts that are owed to a business are known as:

• accounts receivable.

• accounts payable.

• capital.

• expenses

What does a single line within an amount column of a financial statement indicate?

• That the underlined figure is the final amount in a column.

• That the underlined figure is a key item within the financial statement.

• That the amounts above it are being added or subtracted.

• That the amounts below it are being added or subtracted.

When the owner invests cash in a business,

• assets and revenue increase.

• assets increase and owner's equity decreases.

• liabilities decrease and owner's equity increases.

• assets and owner's equity increase.

When equipment is purchased for cash,

• assets and liabilities increase.

• assets increase and liabilities decrease.

• assets, liabilities, and owner’s equity are all unchanged

• assets and expenses increase.

When a business purchases supplies on credit:

• assets decrease and owner's equity increase.

• assets increase and revenues increase.

• assets and liabilities increase.

• liabilities increase and owner's equity decreases.

When a business collects an account receivable:

• total assets do not change.

• assets increase and revenues increase.

• assets and liabilities increase.

• assets increase and owner's equity increases.

When the firm pays its utility bill upon receipt of that bill:

• assets and owner's equity increase.

• assets decrease and expenses increase.

• assets and liabilities decrease.

• expenses increase and owner's equity increases.

When the owner withdraws cash for personal use:

• assets decrease and expenses increase.

• assets decrease and owner's equity increases.

• assets decrease and owner's equity decreases.

• owner's equity decreases and revenue decreases.

Assume that, after analyzing its business transaction, a firm has the following ending balances: accounts payable $3,400, accounts receivable $2,000, cash $1,000, capital $3,600, equipment $3,000, prepaid rent $600, and supplies $400. What is the total amount of assets that will be reported on the firm’s balance sheet?

• $6,400

• $7,000

• $9,800

• $14,000

Assume that a firm has the following information in its analysis of its business transactions during its first year of business: fees income of $12,000, an investment by the owner of $3,000, salaries expenses of $9,000, and withdrawals of $5,000. What is the total amount of owner’s equity that will be reported on the firm’s balance sheet?

• $1,000

• $3,000

• $10,000

• $15,000