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Accounting with tables and multiple choice questions.pdf
Accounting_with_tables_and_multiple_choice_questions.pdf
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CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
CHAPTER 1 ACCOUNTING IN ACTION SU...
CHAPTER 1 ACCOUNTING IN ACTION SUMMARY OF QUESTI
Accounting in Action
1 - 39
Ex. 190
The following transactions represent part of the activities of Lyon Company for the first month of
its existence. Indicate the effect of each transaction upon the total assets of the business by one
of the following phrases: increased total assets, decreased total assets, or no change in total
assets.
(a)
The owner invested cash to start the business.
(b)
Purchased a computer for cash.
(c)
Purchased office equipment with money borrowed from the bank.
(d)
Paid the first month's utility bill.
(e)
Collected an accounts receivable.
(f)
Owner withdrew cash from the business.
Solution 190
(5 min.)
(a) Increased total assets.
(b)
No change in total assets.
(c) Increased total assets.
(d) Decreased total assets.
(e)
No change in total assets.
(f)
Decreased total assets.
Ex. 191
Selected transactions for Barden Company are listed below. List the number of the transaction
and then describe the effect of each transaction on assets, liabilities, and owner's equity.
Sample:
Made initial cash investment in the business.
The answer would be—Increase in assets and increase in owner's equity.
1. Paid monthly utility bill.
2.
Purchased new display case for cash.
3.
Paid cash for repair work on security system.
4.
Billed customers for services performed.
5.
Received cash from customers billed in 4.
6.
Withdrew cash for owner's personal use.
7.
Incurred advertising expenses on account.
8. Paid monthly rent.
9.
Received cash from customers when service was rendered.
Solution 191
(5 min.)
1.
Decrease in assets and decrease in owner's equity.
2.
No net change in assets.
3.
Decrease in assets and decrease in owner's equity.
4.
Increase in assets and increase in owner's equity.
5.
No net change in assets.
6.
Decrease in assets and decrease in owner's equity.
7.
Increase in liabilities and decrease in owner's equity.
8.
Decrease in assets and decrease in owner's equity.
9.
Increase in assets and increase in owner's equity.
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