Question 1

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-A bill is received for the current month's utilities.

Accepted Answer

Receiving a bill for utilities is an external event because it involves an interaction with an external entity (the utility company). It should be recorded as a transaction in the accounting system because it represents an expense incurred during the period, affecting the financial position of the business.

Question 2

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Payments are received from customers to whom merchandise was sold on credit.

Accepted Answer

Receiving payments from customers for merchandise sold on credit is an external event involving an exchange with an external party, which affects the financial position of the company. Therefore, it should be recorded in the accounting system.

Question 3

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.)
-issues financial accounting concepts that are used as a guide to accounting standard-setting in the U.S

Accepted Answer

The Financial Accounting Standards Board (FASB) is responsible for issuing financial accounting concepts that serve as a guide to accounting standard-setting in the United States. These concepts form the conceptual framework for financial reporting that guides the development of accounting standards.

Question 4

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.)
-Retained Earnings

Accepted Answer

Retained Earnings is an equity account, and equity accounts have a normal credit balance. To increase Retained Earnings, you would credit the account.

Question 5

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.)
-paying utilities

Accepted Answer

Paying utilities decreases assets (cash goes out) and decreases retained earnings (expenses reduce retained earnings).

Question 6

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.)
-requires that publicly traded companies file financial information on a timely basis

Accepted Answer

The Securities and Exchange Commission (SEC) is the organization responsible for requiring publicly traded companies to file financial information on a timely basis to ensure transparency and protect investors.

Question 7

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Common shares are issued to investors.

Accepted Answer

Issuing common shares to investors is an external event because it involves a transaction with parties outside of the company. It should be recorded in the accounting system as it affects the company's financial position by increasing equity.

Question 8

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.)
-Prepaid Insurance

Accepted Answer

Prepaid Insurance is an asset account, and the normal balance for asset accounts is a debit. Increasing an asset account requires a debit entry.

Question 9

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Materials are entered onto the assembly line.

Accepted Answer

Moving materials onto the assembly line is considered an internal event because it occurs within the company. However, it should be recorded as a transaction in the accounting system to track the usage of materials and the work in process inventory, reflecting the flow of resources in the production process.

Question 10

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.)
-works to reduce differences in accounting standards throughout the world

Accepted Answer

The International Accounting Standards Board (IASB) is primarily focused on developing and promoting the use of International Financial Reporting Standards (IFRS), which aims to harmonize accounting standards across the globe, thereby reducing differences in accounting practices internationally.

Question 11

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Cash sales are made.

Accepted Answer

Cash sales are external events involving an exchange transaction with an external party (the customer), and thus should be recorded in the accounting system.

Question 12

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.)
-Service Revenues

Accepted Answer

Service Revenues have a normal credit balance, and they increase on the credit side.

Question 13

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.)
-paying dividends to investors

Accepted Answer

Paying dividends to investors decreases assets (cash goes out) and decreases retained earnings (dividends reduce retained earnings).

Question 14

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Tax returns are prepared by the company's accountant.

Accepted Answer

Preparing tax returns is an administrative task and does not represent a financial transaction that affects the accounting equation. Therefore, it should not be recognized as a transaction in the accounting system.

Question 15

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.)
-collecting cash from customers on credit

Accepted Answer

Collecting cash from customers on credit impacts two asset accounts: Cash increases, and Accounts Receivable decreases, with no net effect on total assets.

Question 16

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-Amounts collected from cash and credit customers are deposited in the company's bank account.

Accepted Answer

Amounts collected from cash and credit customers and deposited in the company's bank account represent external events involving an exchange transaction with customers, which should be recorded in the accounting system.

Question 17

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.)
-Accounts Payable

Accepted Answer

Accounts Payable is a liability account, and liability accounts have a normal credit balance. To increase Accounts Payable, you would credit the account.

Question 18

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.)
-An order is placed with a supplier for merchandise.

Accepted Answer

Placing an order with a supplier is a commitment, not an actual transaction that affects the financial position of the company. It does not result in an immediate exchange of assets or obligations, so it should not be recorded in the accounting system until the goods or services are received and an actual transaction occurs.

Question 19

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.)
-has the ultimate authority to set accounting standards but has allowed the profession to do so

Accepted Answer

The Securities and Exchange Commission (SEC) has the ultimate authority to set accounting standards in the United States but has historically allowed the accounting profession to self-regulate, delegating the task of setting standards to organizations like the Financial Accounting Standards Board (FASB).

Question 20

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.)
-Income Tax Expense

Accepted Answer

Income Tax Expense is an expense account, and like all expense accounts, it has a normal debit balance. Increasing an expense account requires a debit entry.

Quiz 2: The Accounting Information System

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -A bill is received for the current month's utilities.

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Payments are received from customers to whom merchandise was sold on credit.

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.) -issues financial accounting concepts that are used as a guide to accounting standard-setting in the U.S

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) -Retained Earnings

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) -paying utilities

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.) -requires that publicly traded companies file financial information on a timely basis

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Common shares are issued to investors.

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) -Prepaid Insurance

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Materials are entered onto the assembly line.

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.) -works to reduce differences in accounting standards throughout the world

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Cash sales are made.

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) -Service Revenues

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) -paying dividends to investors

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Tax returns are prepared by the company's accountant.

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) -collecting cash from customers on credit

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -Amounts collected from cash and credit customers are deposited in the company's bank account.

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) -Accounts Payable

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) -An order is placed with a supplier for merchandise.

Organizations important to accounting are listed. Select the organization that most closely achieves the role described. (Choices may be used more than once.) -has the ultimate authority to set accounting standards but has allowed the profession to do so

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) -Income Tax Expense