Journal Entries
Obtain a loan of $66,000 from bank by signing a note. What is the correct journal entry?
Debit: Cash $66,000
Credit: Note Payable $66,000
the 3 accounting activities are
Financing, investing, operating
Which financial statement do we see revenues and expenses?
Income Statement
The body of rules and procedures that guide the measurement and communication of financial accounting information in the United States is known as (Multiple choice)
Generally Accepted Accounting Principals (GAAP)
Standards of professional compliance (SPC)
Rules of financial reporting (RFR)
GAAP
Pay employees $700 for work performed. What is the correct journal entry?
Debit: Salaries expense $700
Credit: Cash $700
Consider the following cash flow items:
Pay amount owed to bank for previous borrowing.
Pay utility costs.
Purchase equipment to be used in operations.
Purchase office supplies.
Purchase one year of rent in advance.
Pay workers' salaries.
Pay for research and development costs.
Pay taxes to the IRS.
Sell common stock to investors.
How many of these cash flow items involve financing activities?
Two (Pay amount owed to bank for previous borrowing and sell common stock to investors)
What is the formula for net income?
Revenues - Expenses
Which of the following accounts would normally have a credit balance?
Accounts Payable, Service Revenue, Common Stock.
Assets, Expenses, Dividends
Accounts Payable, Service Revenue, Common Stock.
Purchase a truck and sign a note payable, $14,300. What is the correct journal entry?
Debit: Equipment, $14,300
Credit: Note payable, $14,300
Payment of dividends to stockholders is considered a(n):
(Investing, Operating or Financing cash flow)
Financing
Which financial statement do we see assets and liabilities?
Balance Sheet
Which of the following accounts normally has a debit balance?
(Multiple Choice)
Accounts Payable
Service Revenue
Deferred Revenue
Salaries Expense
Salaries Expense
Receive cash in advance for services to be performed in the future, $3,000. What is the correct journal entry?
Debit: Cash $3,000
Credit: Deferred Revenue $3,000
Consider the following cash flow items:
Pay amount owed to bank for previous borrowing.
Pay utility costs.
Purchase equipment to be used in operations.
Purchase office supplies.
Pay one year of rent in advance.
Pay workers' salaries.
Pay for research and development costs.
Pay taxes to the IRS.
Sell common stock to investors.
How many of these cash flow items involve investing activities?
One (Purchase Equipment to be used in operations)
What is the basic accounting equation?
Assets = Liabilities + Stockholders equity
When a company pays for services received using a credit card, it should credit Accounts Payable.
True or false?
True
Purchase cleaning supplies of $7,000 on account. What is the correct journal entry?
Debit: Supplies $7,000
Credit: Accounts Payable $7,000
Draco Company engages in the following cash payments:
Purchase equipment $3,850
Pay rent $275
Repay loan to the bank $5,400
Pay workers’ salaries $700
What is the total amount of cash paid for operating activities?
$975 ($275 + $700)
True or False
Assets decrease with debits
FALSE
Assets increase with debits and decrease with credits
Companies should set maximum purchase limits on debit cards and credit cards as part of internal controls.
True or False