Question

Circle the best answer to each of the following questions. 1. When a company has performed services for a client but has not yet received payment, it: a. makes no entry until the cash is received. b. debits Accounts Receivable and credits Revenue. c. debits Accounts Payable and credits Revenue. d. debits Cash and credits Accounts Receivable. 2. Brewer Company's controller accidentally erased the 8/1/20 balance for the Cash account. However, she can see that the 8/31/20 Cash balance is $350,000, the company collected $900,000 cash during August 2020 and paid $1,000,000 cash during August 2020. What was the 8/1/20 Cash balance? a $550,000 b. $350,000 c. $250,000 d. $450,000 3. Which of the following statements is TRUE? a. If a company provides service and bills its client $20,000, the journal entry to record this transaction will cause Total Assets to increase. b. If a company collects a cash deposit of $20,000 for services not yet performed, the journal entry to record this transaction will cause Net Income to increase. c. If a company pays $20,000 for inventory previously purchased on account, the journal entry to record this payment will cause Total Liabilities to increase. d. None of the above. On September 1, Marina, Inc. purchased $500,000 worth of merchandise inventory on credit. On September 14, Marina paid $500,000 cash related to this purchase. 4. The journal entry to record the September 1 transaction will have the following effect on Marina's financial statements: a. Total Expenses will increase by $500,000. b. Total Liabilities will increase by $500,000. Total Assets will decrease by $500,000. d. Total Stockholders' Equity will decrease by $500,000. e. None of the above. c. 5. The journal entry to record the September 14 transaction will have the following effect on Marina's financial statements: a. Total Expenses will increase by $500,000. b. Total Liabilities will increase by $500,000. c. Total Assets will decrease by $500,000. d. Total Stockholders' Equity will decrease by $500,000. e. None of the above. 1

Answer 1

1.
Answer is b. Debit accounts receivable and credits Revenue

2.
Answer is d. $450000 i.e. $1000000 + 350000 - 900000

3.
Answer is a. If a company provides services and bills its client $20000, the journal entry to record this transaction will cause Total Assets to increase.

4.
Answer is b. Total Liabilities will increase by $500,000

5.
Answer is c. Total Assets will decrease by $500,000

6.
Answer is c. Accounts Receivable, Since normal balance of this account is debit

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