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Louisiana Enterprises received payment from its customers for previous sales on credit. What was the impact on its working capital?


A) Increase in working capital
B) Decrease in working capital
C) No effect on working capital
D) Unable to determine

E) All of the above
F) B) and C)

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The issuance of stock decreases a company's assets and increases its stockholders' equity.

A) True
B) False

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A debit entry increases assets, decreases liabilities, or decreases stockholders' equity.

A) True
B) False

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The term "chronological order" is best associated with:


A) a journal.
B) a trial balance.
C) credit entries.
D) capital stock.

E) A) and C)
F) B) and D)

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Maryland Vacations has a $2,200 account receivable from the Miami Kiwanis. On March 11, the Kiwanis makes a partial payment of $1,050 to Maryland. The journal entry made on March 11 by Maryland to record this transaction includes:


A) an increase in the Cash account of $1,150.
B) an increase in the Accounts Receivable account of $1,150.
C) an increase in the Service Revenue account of $1,050.
D) a decrease in the Accounts Receivable account of $1,050.

E) All of the above
F) A) and B)

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Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all. -Ownership in a company that allows the owner to receive dividends before common shareholders receive any distributions


A) Cash
B) Prepaid Asset
C) Investments
D) Taxes Payable
E) Preferred Stock
F) Accounts Receivable
G) Land
H) Accounts Payable
I) Retained Earnings
J) Notes Receivable
K) Buildings
L) Notes Payable
M) Common Stock

N) I) and J)
O) B) and J)

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A company's chart of accounts will reflect the nature of its business.

A) True
B) False

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How frequently should entries be posted from the journal to the ledger? How have computers improved the posting process?

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There is no standard rule about the freq...

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Payment is made for an electric bill which was received and recorded earlier. For this transaction, identify the effect on the accounting equation.


A) Assets increase and liabilities increase.
B) Assets increase and stockholders' equity increases.
C) Liabilities increase and stockholders' equity decreases.
D) Liabilities decrease and assets decrease.

E) B) and C)
F) A) and D)

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Debit entries are used to:


A) increase asset accounts.
B) decrease expense accounts.
C) increase liability accounts.
D) increase revenue accounts.

E) C) and D)
F) A) and B)

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When making a general journal entry, there can only be one debit and one credit.

A) True
B) False

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For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Prepaid Insurance


A) Balance sheet account
B) Income statement account

C) A) and B)
D) undefined

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Each account has a normal balance. For the following list of accounts, indicate whether the normal balance of each is a debit or a credit. -Prepaid Insurance


A) Debit
B) Credit

C) A) and B)
D) undefined

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Which of the following statements regarding the activities of Forman Corp. is true?


A) Revenues decrease Forman's stockholders' equity.
B) Expenses increase Forman's stockholders' equity.
C) Expenses decrease Forman's stockholders' equity.
D) None of these answer choices is correct.

E) A) and B)
F) All of the above

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Every accounting transaction affects both the balance sheet and the income statement.

A) True
B) False

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For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Accounts Receivable


A) Balance sheet account
B) Income statement account

C) A) and B)
D) undefined

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A cash register tape would be a source document for which of the following?


A) Recording a purchase of inventory on credit
B) Recognizing a cash sale
C) Recording an invoice
D) Recording payroll

E) B) and C)
F) A) and C)

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Land is purchased on credit. For this transaction, identify the effect on the accounting equation.


A) Assets increase and liabilities increase.
B) Assets increase and owners' equity increases.
C) Liabilities increase and owners' equity decreases.
D) Liabilities decrease and assets decrease.

E) A) and B)
F) B) and C)

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Identify which of the following would be recorded as external events, recorded as internal events, or not recorded. -The company transfers work in process to finished goods inventory.


A) Internal event
B) External event
C) Not recorded

D) A) and B)
E) A) and C)

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For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Income Taxes Expense


A) Balance sheet account
B) Income statement account

C) A) and B)
D) undefined

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