What is the par value of stock?
The price below which the stock may not be sold in an initial offering.
How is the Cash account affected when common stock is issued for cash?
It is increased with a debit for the amount of cash received.
Which accounts are credited when common stock is issued for cash?
- Common Stock account (for par value)
- Additional Paid-in Capital account (for the difference between the sale price and par value)
What type of journal entry is used to record the sale of common stock?
A compound journal entry.
How are asset accounts affected when land and buildings are purchased for cash?
- Land account is debited
- Buildings account is debited
- Cash account is credited
What happens to total assets, liabilities, and equity when land and buildings are purchased for cash?
These remain unchanged.
How is the Cash account affected when land is sold for cash?
It is debited to reflect an increase equal to the amount received the land sale.
How is the Land account affected when land is sold for cash?
It is credited to decrease it by the the amount that the land is recorded for.
What accounts are affected when furniture and equipment are purchased on credit?
- Furniture & Equipment account is debited
- Accounts Payable account is credited
How is the Inventory account affected when inventory is purchased on credit?
The Inventory account is debited to increase it by the cost of the inventory.
How is the Accounts Payable account affected when inventory is purchased on credit?
The Accounts Payable account is credited to increase it by the amount owed.
What happens when inventory items that were purchased on credit are returned?
- Inventory account is credited
- Accounts Payable account is debited
What is the purpose of the ‘Ref’ column in ledger accounts?
To reference the page number in the General Journal where the transaction is journalized.
How are errors minimized in an automated accounting information system?
Input that updates the ledger accounts is done only once, reducing copying errors.
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Accounting Foundations & Terminology46
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Recording Transactions & the Accounting Cycle13
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T-Accounts and Journalizing10
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Business Transactions in Practice14
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Trial Balances and Comprehensive Income6
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Subsidiary Ledgers and Revenue Examples24
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Advanced Transactions and Adjusting Entries21
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Adjusted Trial Balance to Year-End Close36
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Financial Statement Types and Elements28
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Statement of Cash Flows18
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Internal Controls18
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Managing Daily Finances45
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Valuing Assets, Liabilities & Equity42
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Revenue Recognition & Income Measurement12
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Financial Statement Analysis8
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Financial Ratios Overview43
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Budgeting Principles and Practices23
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Budgeting Methodologies and Cycles16
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Master Budget & Supporting Schedules24
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Cost Classifications & Costing Systems29
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Manufacturing Overhead and ABC22
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Variance Analysis23
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Performance Measurement & Decision Making27
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Business Ethics & Professional Conduct40
