Wiley Plus Chapter 3 Homework Flashcards
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Questions and Answers

What is the equation for Assets?

  • Assets = Liabilities + Stockholder's Equity (correct)
  • Assets = Common Stock + Retained Earnings
  • Assets = Cash + Accounts Receivable + Supplies + Equipment (correct)
  • Assets = Revenue - Expenses - Dividends

    • What are the components of Liabilities?

    Accounts Payable + Bonds Payable

    What is the definition of Stockholder's Equity?

    Common Stock + Retained Earnings

    What does R/E stand for?

    <p>Retained Earnings</p> Signup and view all the answers

    What is the cash transaction when common stock is issued for cash?

    <p>$145,840</p> Signup and view all the answers

    What is the journal entry for borrowing $43,650 by issuing bonds?

    <p>Cash 43,650, Bonds Payable 43,650</p> Signup and view all the answers

    What is the cash entry for purchasing delivery trucks for $52,630?

    <p>$-52,630</p> Signup and view all the answers

    What is the revenue recorded for services performed to customers?

    <p>$14,550</p> Signup and view all the answers

    What is the journal entry when purchasing supplies on account for $6,100?

    <p>Supplies 6,100, Accounts Payable 6,100</p> Signup and view all the answers

    What is the amount paid for rent?

    <p>$5,900</p> Signup and view all the answers

    What is the entry for performing services on account for $11,000?

    <p>Accounts Receivable 11,000, Revenue 11,000</p> Signup and view all the answers

    What is the journal entry for paying salaries of $26,270?

    <p>Cash -26,270, Expense 26,270</p> Signup and view all the answers

    An ____ is an individual accounting record of increases and decreases in specific assets, liabilities, and stockholders' equity items.

    <p>Account</p> Signup and view all the answers

    How are asset accounts affected by debits and credits?

    <p>Increased by Debits and Decreased by Credit</p> Signup and view all the answers

    How are liability accounts affected by debits and credits?

    <p>Decreased by Debit and Increased by Credit</p> Signup and view all the answers

    What is the normal balance for an accounts receivable?

    <p>Debit Balance</p> Signup and view all the answers

    What balance does the cash account typically have?

    <p>Debit Balance</p> Signup and view all the answers

    What is the balance type for dividends?

    <p>Debit Balance</p> Signup and view all the answers

    What is the balance type for accounts payable?

    <p>Credit Balance</p> Signup and view all the answers

    What is the balance type for service revenue?

    <p>Credit Balance</p> Signup and view all the answers

    What is the normal balance for salaries and wages expenses?

    <p>Debit Balance</p> Signup and view all the answers

    What happens to cash in the transaction where common stock is issued for $19,310?

    <p>$19,310</p> Signup and view all the answers

    What is the entry for purchasing equipment for $8,660, paying part in cash?

    <p>Cash -3800, Equipment 8,660, Accounts Payable 4860</p> Signup and view all the answers

    How do you record services performed on account for $18,000?

    <p>Accounts Receivable 18,000, Revenue 18,000</p> Signup and view all the answers

    What is the cash movement for paying salaries of $1,200?

    <p>$-1,200</p> Signup and view all the answers

    What is recorded when paying $2,640 cash on balance owed for equipment?

    <p>Cash -2,640, Accounts Payable -2,640</p> Signup and view all the answers

    What is the cash movement for paying an $810 cash dividend?

    <p>$-810</p> Signup and view all the answers

    What is the entire group of accounts maintained by a company called?

    <p>Ledger</p> Signup and view all the answers

    What does 'posting' refer to in accounting?

    <p>Transferring journal entries to ledger accounts</p> Signup and view all the answers

    What is the term for the side which increases an account?

    <p>Normal account balance</p> Signup and view all the answers

    What is the purpose of a chart of accounts?

    <p>A list of all the accounts used by a company</p> Signup and view all the answers

    What does the left side of an account represent?

    <p>Debit</p> Signup and view all the answers

    What is a source document?

    <p>Evidence that a transaction has taken place</p> Signup and view all the answers

    What shows the debit and credit effects of specific transactions?

    <p>Journal</p> Signup and view all the answers

    What is a trial balance?

    <p>A list of accounts and their balances at a given time</p> Signup and view all the answers

    Which account has a credit normal balance?

    <p>Revenue account</p> Signup and view all the answers

    What is recorded when stockholders invest $21,438 cash in common stock?

    <p>Cash-Debit 21,438, Common Stock-Credit 21,438</p> Signup and view all the answers

    What entry is made for hiring a secretary-receptionist at a salary of $447 per week?

    <p>No entry</p> Signup and view all the answers

    What is the entry for paying office rent of $1,072 for the month?

    <p>Rent Expense-Debit 1,072, Cash-Credit 1,072</p> Signup and view all the answers

    What does the transaction of purchasing architectural supplies on account for $1,548 show?

    <p>Supplies-Debit 1,548, Account Payable-Credit 1,548</p> Signup and view all the answers

    What happens when blueprints on a carport are completed and billed to the client for $2,263?

    <p>Accounts Receivable-Debit 2,263, Service Revenue-Credit 2,263</p> Signup and view all the answers

    What is recorded when receiving an $834 cash advance for designing a new home?

    <p>Cash-Debit 834, Unearned Service Revenue-Credit 834</p> Signup and view all the answers

    What is the entry when receiving $3,335 cash for services completed?

    <p>Cash-Debit 3,335, Service Revenue-Credit 3,335</p> Signup and view all the answers

    What is recorded when paying $1,788 to the secretary-receptionist for the month?

    <p>Salaries and Wages Expenses-Debit 1,788, Cash-Credit 1,788</p> Signup and view all the answers

    What entry is shown for paying $357 to Burlington Company for accounts payable?

    <p>Accounts Payable-Debit 357, Cash-Credit 357</p> Signup and view all the answers

    Study Notes

    Accounting Equation

    • Assets equal Liabilities plus Stockholder's Equity.
    • Assets comprised of Cash, Accounts Receivable, Supplies, and Equipment.
    • Liabilities consist of Accounts Payable and Bonds Payable.
    • Stockholders' Equity includes Common Stock and Retained Earnings (R/E).
    • Retained Earnings calculated as Revenue minus Expenses minus Dividends.

    Issuance of Stock

    • Issued common stock for cash totaling $145,840; affects Cash and Common Stock accounts equally.

    Borrowing Funds

    • Issued bonds to borrow $43,650; increases both Cash and Bonds Payable.

    Equipment Transactions

    • Acquired delivery trucks for $52,630 cash, reducing Cash and increasing Equipment.
    • Purchased equipment costing $8,660, paying $3,800 in cash and financing the remainder via Accounts Payable.

    Revenue Recognition

    • Received $14,550 in cash for services, increasing both Cash and Revenue.
    • Performed services on account, resulting in $11,000 increase in Accounts Receivable and Revenue.

    Expense Payments

    • Rent paid amounted to $5,900, reducing Cash while increasing Expenses.
    • Salaries paid totaled $26,270, decreasing Cash and increasing Expenses.

    Dividends

    • Paid out dividends to shareholders amounting to $10,810, reducing Cash and increasing Dividends.

    Account Definitions

    • An Account is an individual record for tracking specific asset, liability, and stockholder’s equity changes.
    • Asset accounts increase with Debits and decrease with Credits.
    • Liability accounts decrease with Debits and increase with Credits.
    • Common Stock account operates similarly to liability accounts with Credits increasing and Debits decreasing.

    Balances in Accounts

    • Accounts Receivable, Cash, and Dividends have a Debit balance.
    • Accounts Payable, Service Revenue, and Common Stock have a Credit balance.
    • Expenses, including Salaries and Wages, maintain a Debit balance.

    Ledger and Posting

    • A Ledger is a complete set of accounts kept by a company.
    • Posting refers to transferring journal entries into individual ledger accounts.

    Journal Entries and Documentation

    • The Journal records debit and credit effects of transactions.
    • A Trial Balance lists accounts and their respective balances at a specific date.
    • Each transaction must have a Source Document as proof of occurrence.

    Normal Account Balance

    • The normal balance indicates the side that predominantly increases an account.
    • Revenue accounts typically exhibit a credit normal balance.

    Assistant Hires

    • Hiring a secretary does not create an immediate accounting entry until payment or services provided.

    Cash Transactions

    • Received $834 in cash for service design work, categorized as Unearned Service Revenue.
    • Cash payment for office rent was $1,072, impacting Rent Expense and Cash accounts.
    • Payments of salary and accounts payable demonstrate various cash flow changes impacting related accounts.

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    Test your knowledge on the concepts from Wiley Plus Chapter 3 with this set of flashcards. Explore key equations related to assets, liabilities, and stockholder's equity. Perfect for students preparing for exams in accounting.

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