CHAPTER 3: DOUBLE ENTRY
Multiple questions:
Which of these accounts is an asset?
A. Common Stock
B. Supplies
C. Accounts Payable
D. Fees Earned
Which of these accounts is a liability?
A. Accounts Receivable
B. Supplies
C. Salaries Expense
D. Accounts Payable
If equity equals $100,000, which of the following is true?
A. Assets exceed liabilities by $100,000.
B. Liabilities exceed equity by $100,000.
C. Assets + liabilities equal $100,000.
D. None of the above is true.
Which of these events will not be recognized?
A. A service is performed, but the payment is not collected on the same day.
B. Supplies are purchased. They are not paid for; the company will be billed.
C. A copy machine is ordered. It will be delivered in two weeks.
D. Electricity has been used but has not been paid for.
What is the impact on the accounting equation when a current month’s utility expense is
paid?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes
What is the impact on the accounting equation when a payment of account payable is made?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes
What is the impact on the accounting equation when an accounts receivable is collected?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. the total of neither side changes
What is the impact on the accounting equation when a sale occurs?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes
What is the impact on the accounting equation when stock is issued, in exchange for assets?
A. both sides increase
B. both sides decrease
C. only the Asset side changes
D. neither side changes
Which of the following accounts is increased by a debit?
A. Common Stock
B. Accounts Payable
C. Supplies
D. Service Revenue
Which of the following accounts does not increase with a debit entry?
A. Retained Earnings
B. Buildings
C. Prepaid Rent
D. Electricity Expense
Which of the following pairs increase with credit entries?
A. supplies and retained earnings
B. rent expense and unearned revenue
C. prepaid rent and common stock
D. unearned service revenue and accounts payable
Which of the following pairs of accounts are impacted the same with debits and credits?
A. Cash and Unearned Service Revenue
B. Electricity Expense and Office Supplies tài khon tài sn và tài khon chi phí
C. Accounts Receivable and Accounts Payable
D. Buildings and Common Stock
What type of account is prepaid insurance?
A. Stockholders’ Equity
B. Expense
C. Liability
D. Asset
Which of these transactions requires a debit entry to Cash?
A. paid balance due to suppliers
B. sold merchandise on account
C. collected balance due from customers
D. purchased supplies for cash
Which of these transactions requires a credit entry to Revenue?
A. received cash from services performed this month
B. collected balance due from customers
C. received cash from bank loan
D. refunded a customer for a defective product
Which of these accounts commonly requires both debit and credit entries?
A. Sales Revenue
B. Utilities Expense
C. Accounts Receivable
D. Common Stock
Exercise:
Ex1. Consider the following accounts, and determine if the account is an asset (A), a liability
(L), or equity (E).
A. Accounts Payable
B. Cash
C. Dividends
D. Notes Payable
Ex2. Identify the financial statement on which each of the following accounts would appear:
the income statement (IS), the retained earnings statement (RE), or the Balance Sheet (BS).
A. Insurance Expense
B. Accounts Receivable
C. Office Supplies
D. Sales Revenue
E. Common Stock
F. Notes Payable
Ex3. For the following accounts please indicate whether the normal balance is a debit or a
credit.
A. Sales
B. Dividends
C. Office Supplies
D. Retained Earnings
E. Accounts Receivable
F. Prepaid Rent
G. Prepaid Insurance
H. Wages Payable
I. Building
J. Wages Expense
Ex4. Identify whether each of the following transactions would be recorded with a debit (Dr)
or credit (Cr) entry.
Debit or credit?
Cash increase
Supplies decrease
Accounts Payable increase
Common Stock decrease
Interest Payable decrease
Notes Payable decrease
Equipment decrease
Common Stock Sold increase
Gas and Oil Expense increase
Service revenue decrease
Miscellaneous Expense decrease
Bonds Payable decrease
Ex5. Journalize for Harper and Co. each of the following transactions or state no entry
required and explain why. Be sure to follow proper journal writing rules.
A. A corporation is started with an investment of $50,000 in exchange for stock.
B. Equipment worth $4,800 is ordered.
C. Office supplies worth $750 are purchased on account.
D. A part-time worker is hired. The employee will work 15–20 hours per week starting
next Monday at a rate of $18 per hour.
E. The equipment is received along with the invoice. Payment is due in three equal
monthly installments, with the first payment due in sixty days.
Ex6. Discuss how each of the following transactions for Watson, International, will affect
assets, liabilities, and stockholders’ equity, and prove the company’s accounts will still be in
balance.
A. An investor invests an additional $25,000 into a company receiving stock in
exchange.
B. Services are performed for customers for a total of $4,500. Sixty percent was paid in
cash, and the remaining customers asked to be billed.
C. An electric bill was received for $35. Payment is due in thirty days.
D. Part-time workers earned $750 and were paid.
E. The electric bill in “C” is paid.
Ex7. For each item that follows, indicate whether a debit or a credit applies.
A. increase in prepaid insurance
B. increase in utilities expense
C. increase in commissions earned
D. increase in supplies
E. decrease in retained earnings
F. decrease in income taxes payable
G. increase in unearned revenue
H. increase in salaries expense
I. decrease in notes receivable
J. increase in common stock
Ex8. Prepare journal entries to record the following transactions.
A. January 22, purchased, an asset, merchandise inventory on account for $2,800.
B. February 10, paid creditor for part of January 22 purchase, $1,600
C. March 1, purchased land for cash, $20,000
D. March 11, purchased merchandise inventory, on account, $18,500
E. March 15, Sold merchandise to customer for cash, $555
F. July 1, issued common stock for cash, $15,000
G. July 15, purchased supplies, on account, $1,800
H. July 25, billed customer for accounting services provided, $950
Ex9. Krespy Corp. has a cash balance of $7,500 before the following transactions occur:
A. received customer payments of $965
B. supplies purchased on account $435
C. services worth $850 performed, 25% is paid in cash the rest will be billed
D. corporation pays $275 for an ad in the newspaper
E. bill is received for electricity used $235.
F. dividends of $2,500 are distributed
What is the balance in cash after these transactions are journalized and posted?