Q: Which of the following best represents the expanded accounting equation?

$$\text{Assets} = \text{Liabilities} + \text{Contributed Capital} + \text{Retained Earnings} + \text{Revenues} - \text{Expenses} - \text{Dividends}$$

Q: Which equation is used to calculate the ending balance of an account?

$$\text{Beginning Balance} + \text{Increases} - \text{Decreases} = \text{Ending Balance}$$

Question 1

Which of the following best represents the expanded accounting equation?

Accepted Answer

$$	ext{Assets} = 	ext{Liabilities} + 	ext{Contributed Capital} + 	ext{Retained Earnings} + 	ext{Revenues} - 	ext{Expenses} - 	ext{Dividends}$$

Question 2

A company pays cash to settle an accounts payable. Which accounts are affected and how?

Accepted Answer

Cash decreases (credit); Accounts Payable decreases (debit)

Question 3

Which of the following statements about the double-entry system is correct?

Accepted Answer

Every transaction must affect at least two accounts, and total debits must equal total credits.

Question 4

If a company records $$\5$$,000$ in revenue, what is the correct journal entry?

Accepted Answer

Debit Cash or Accounts Receivable $$\5$$,000$$; Credit Revenue $$\$$5,000$$

Question 5

Which of the following accounts normally has a debit balance?

Accepted Answer

Expenses

Question 6

A company incurs $$\2$$,000$ in rent expense but has not yet paid it. What is the effect on the accounting equation?

Accepted Answer

Increase Expenses (debit), Increase Liabilities (credit)

Question 7

Which of the following transactions would NOT be recorded in the accounting records?

Accepted Answer

Discussing product design with a potential customer

Question 8

Given the following T-account for Accounts Receivable: Beginning Balance $$1,000$$, New Sales $$100$$, Cash Collections $$80$$, what is the ending balance?

Accepted Answer

$$1,020$$

Question 9

Which of the following best describes the normal balance for a revenue account?

Accepted Answer

Credit

Question 10

If the sum of debit entries in an account is greater than the sum of credit entries, the account will have:

Accepted Answer

A debit balance

Question 11

Which equation is used to calculate the ending balance of an account?

Accepted Answer

$$	ext{Beginning Balance} + 	ext{Increases} - 	ext{Decreases} = 	ext{Ending Balance}$$

Question 12

Which of the following is true regarding the effect of debits and credits on assets?

Accepted Answer

Debits increase assets; credits decrease assets.

Question 13

A company issues common stock for cash. What is the correct journal entry?

Accepted Answer

Debit Cash; Credit Common Stock

Question 14

Which of the following best describes the relationship among the balance sheet, income statement, and retained earnings statement?

Accepted Answer

Net income from the income statement increases retained earnings, which is reported in the balance sheet.

Question 15

Which of the following accounts would be increased by a credit entry?

Accepted Answer

Revenues

Question 16

If a company pays a dividend, what is the effect on the accounting equation?

Accepted Answer

Decrease in assets and decrease in retained earnings

Question 17

Which of the following is NOT a rule of debits and credits?

Accepted Answer

Debits must always exceed credits for all transactions.

Question 18

Which of the following best describes the normal balance for a liability account?

Accepted Answer

Credit

Question 19

A company receives cash from a customer for a previous sale on account. What is the effect on the accounts?

Accepted Answer

Increase Cash (debit); Decrease Accounts Receivable (credit)

Question 20

Which of the following is the correct effect of a debit entry on the following accounts: Assets, Liabilities, Revenues?

Accepted Answer

Increases assets, decreases liabilities, decreases revenues

Debit and Credit, T-Accounts, and Double Entry in Financial Accounting

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