1. ______ Borrowing money from a bank a. Increases assets and decreases liabilit

Question

1. ______ Borrowing money from a bank
a. Increases assets and decreases liabilities
b. Increases liabilities and decreases assets
c. Decreases assets and decreases liabilities
d. Increases assets and increases liabilities

2. ______ Which of the following accounts would normally NOT have a credit balance? a. Accounts Payable
b. Cost of Goods Sold
c. Sales Revenue
d. Retained Earnings

3. ______ When previously declared dividends are paid,
a. Assets are decreased and liabilities are decreased
b. Assets are increased and owners' equity is increased
c. Assets are decreased and owners' equity is increased
d. Assets are decreased and owners' equity is decreased


4. 10. ______ Given the following data, what is the amount in the supplies account to be shown as an asset on the balance sheet at the end of the period?

Supplies (beginning of period) $500
Supplies purchased (during period) 425
Supplies used (during period) 375

a. $350
b. $550
c. $375
d. $425

Explanation / Answer

1 Borrowing Money from Bank Increases Assets , increases Liabilities Explanation : Journal entry for this transaction would be; Cash Account        Loan ( or Notes Payable ) Debit in Cash account(which is an asset) means increase, Credit in Notes payable(which is a liability) means decrease 2 Cost of Goods Sold would normally not have a credit balance 3 When previously declared dividends are paid, Liabilities decrease, Assets Decrease. Explanation : Journal entry for this transaction would be; Dividends Payable Cash Debit in Notes payable(which is a liability) means decrease Credit in cash(which is an asset) means decrease 4 The amount to be shown on supplies account at the end of the period : 500+425-375 =550.

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