1. Which of the following is not part of measuring external transactions?
2. External events include all of the following except:
3. Which step in the process of measuring external transactions involves assessing the
equality of total debits and total credits?
4. For each transaction recorded in an accounting system, the basic equation that must be
maintained at all times is:
5. The following amounts are reported in the ledger of Mariah Company:
What is the balance in the Common Stock account?
6. When a company incurs workers’ salaries but does not pay them, how will the basic
accounting equation be affected?
7. When cash payments are made to stockholders, what is the effect on the company’s
accounts?
8. Which of the following is not an asset account?
9. An account receivable can best be defined as:
10. Receiving assets from customers before services are performed results in:
11. When the company pays stockholders a dividend, what is the effect on the accounting
equation for that company?
12. Pumpkin Inc. sold $500 in pumpkins to a customer on account on January 1. On January
11 Pumpkin collected the cash from that customer. What is the impact on Pumpkin’s
accounting equation from the collection of cash?
13. A company receives a $50,000 cash deposit from a customer on October 15 but will not
14. Which of the following would increase assets and increase liabilities?
15. Receiving cash from an account receivable:
16. An expense has what effect on the accounting equation?
17. A revenue has what effect on the accounting equation?
18. Investments by stockholders have what effect on the accounting equation?
19. Which of the following is not possible when recording a transaction?
20. Amounts owed to suppliers for supplies purchased on account are defined as:
21. Purchasing office supplies on account will:
22. Providing services and receiving cash will:
23. When a company provides services on account, the accounting equation would be affected
as follows:
25. When a payment is made on an account payable:
26. Purchasing office equipment on account has what impact on the accounting equation?
27. Purchasing supplies for cash has what effect on the accounting equation?
28. The Unearned Revenue account is shown in which statement?
29. On January 1, Brad Inc. sold $30,000 in products to a customer on account. Then, on
January 10, Brad collected the cash on that account. What is the impact on Brad’s accounting
equation from the collection of cash on January 10?
30. Consider the following transactions:
Issued common stock for cash.
Purchased equipment by signing a note payable.
Provided services to customers on account.
Collected cash from customers on account.
How many of these four transactions increased the given company’s total liabilities?
31. Consider the following transactions:
Issued common stock for cash.
Purchased equipment by signing a note payable.
Paid rent for the current month.
Collected cash from customers on account.
How many of these four transactions increased the given company’s total assets?
32. Assume that Sallisaw Sideboards, Inc. had a retained earnings balance of $10,000 on
April 1, and that the company had the following transactions during April.
Issued common stock for cash, $5,000.
Provided services to customers on account, $2,000.
Provided services to customers in exchange for cash, $900.
Purchased equipment and paid cash, $4,300.
Paid April rent, $800.
Paid workers salaries for April, $700.
What was Sallisaw’s retained earnings balance at the end of April?
33. Following are transactions of Gotebo Tanners, Inc., a new company, during the month of
January 2012:
1. Issued 10,000 shares of common stock for $15,000 cash.
2. Purchased land for $12,000, signing a note payable for the full amount.
3. Purchased office equipment for $1,200 cash.
4. Received cash of $14,000 for services provided to customers during the month.
5. Purchased $300 of office supplies on account.
6. Paid employees $10,000 for their first month’s salaries.
What was the balance of Gotebo’s Cash account following these six transactions?
34. Following are transactions of Gotebo Tanners, Inc., a new company, during the month of
January 2012:
1. Issued 10,000 shares of common stock for $15,000 cash.
2. Purchased land for $12,000, signing a note payable for the full amount.
3. Purchased office equipment for $1,200 cash.
4. Received cash of $14,000 for services provided to customers during the month.
5. Purchased $300 of office supplies on account.
6. Paid employees $10,000 for their first month’s salaries.
What was the total amount of Gotebo’s liabilities following these six transactions?
35. Following are transactions of Gotebo Tanners, Inc., a new company, during the month of
January 2012:
1. Issued 10,000 shares of common stock for $15,000 cash.
2. Purchased land for $12,000, signing a note payable for the full amount.
3. Purchased office equipment for $1,200 cash.
4. Received cash of $14,000 for services provided to customers during the month.
5. Purchased $300 of office supplies on account.
6. Paid employees $10,000 for their first month’s salaries.
How many of these transactions decreased Gotebo’s total assets?
36. Following are transactions of Gotebo Tanners, Inc., a new company, during the month of
January 2012:
1. Issued 10,000 shares of common stock for $15,000 cash.
2. Purchased land for $12,000, signing a note payable for the full amount.
3. Purchased office equipment for $1,200 cash.
4. Received cash of $14,000 for services provided to customers during the month.
5. Purchased $300 of office supplies on account.
6. Paid employees $10,000 for their first month’s salaries.
How many of these transactions increased Gotebo’s liabilities?
37. Which of the following transactions causes a decrease in stockholders’ equity?
38. How many of the following events would require an expense to be recorded?
Ordering office supplies
Hiring a receptionist
Paying employee salaries for the current month
Receiving but not paying a current utility bill
Paying for insurance in advance
39. On September 30, MFP Co. paid employee salaries $7,000, including $1,000 it owed to its
employees last month. What are the effects of this transaction on the accounting equation?
40. Which of the following is NOT possible for a business transaction?
41. Which of the following transactions would cause a decrease in both assets and
stockholders’ equity?
42. When a company issues common stock for cash, what is the effect on the accounting
equation for the company?
43. Which of the following is possible for a particular business transaction?
44. Providing services to customers on account would affect the balances reported in which
financial statement(s)?
45. If the liabilities of a company increased by $55,000 during a month and the stockholders’
equity decreased by $21,000 during that same month, did assets increase or decrease and by
how much?