Reference no: EM13337404

Question

1. R. Sparks, an interior decorator, started a business by investing $10,000 cash. The business would record this transaction:

a. Debit Cash $10,000, Credit Revenue $10,000

b. Debit Cash $10,000, Credit R. Sparks, Capital $10,000

c. Credit Cash $10,000, Debit R. Sparks, Capital $10,000

d. Credit Cash $10,000, Debit Revenue $10,000

2. R Sparks business purchases a used car for $6,000 cash. The business would record this transaction:

a.  Debit Car expense $6,000, Credit Cash $6,000

b. Debit Cash 6,000, Credit Car expense $6,000

c. Debit Assets: car $6,000, Credit Cash $6,000

d. Debit Cash $6,000, Credit Assets: car $6,000

3. R. Sparks business purchases a one year liability insurance policy effective immediately for $1,200 cash. The business would record this transaction:

a. Debit Asset: Prepaid insurance $1,200, Credit cash $1,200

b. Debit Insurance expense $1,200, Credit cash $1,200

c. Debit Cash $1,200, Credit Prepaid Insurance $1,200

d. Debit Cash $1,200, Credit Insurance Expense $1,200

4. R. Sparks business purchases six months of supplies on account for $550.  The business would record this transaction:

a. Debit Supplies Expense $550, Credit Cash $550

b. Debit Supplies Expense $550, Credit Accounts Payable $550

c. Debit Asset: Supplies $550, Credit Cash $550

d. Debit Asset: Supplies $550, Credit Accounts Payable $550

5. R. Sparks business billed customers $2,100 for services performed. The business would record this transaction:

a. Debit Accounts Receivable $2,100, Credit Service Revenues $2,100

b. Debit Cash $2,100, Credit Service Revenues $2,100

c. Debit Service Revenues $2,100, Credit Cash $2,100

d. Debit Service Revenues $2,100, Credit Accounts Receivable $2,100

6. R. Sparks withdrew from his business $300.  The business would record this transaction:

a. Debit Cash $300, Credit Draws $300

b. Debit Draws $300, Credit Cash $300

c. Debit Draw expense $300, Credit Cash $300

d. Debit Cash $300, Credit Accounts Payable $300

7. R. Sparks business received payment from customers previously billed $1,000.  The business would record this transaction:

a. Debit Cash $1,000, Credit Accounts Receivable $1,000

b. Debit Cash $1,000, Credit Accounts Payable $1,000

c. Debit Accounts receivable $1,000, Credit Service revenue $1,000

d. Debit Service revenue $1,000, Credit Cash $1,000.

8. R. Sparks business received $800 cash in advance for services to be performed next quarter.

The business would record this transaction:

a. Debit Accounts Receivable $800, Credit Unearned Revenue $800

b. Debit Cash $800, Credit Earned Revenue $800

c. Debit Cash $800, Credit Unearned revenue $800

d. Debit Unearned revenue $800, Credit Cash $800

9. R. Sparks business had purchased office supplies for $1,000 and had recorded the purchase as Asset:  Office Supplies.  At month end, when preparing the financial statements, an inventory shows that $700 of office supplies is still on hand.

The business would record and adjusting entry for this transaction:

a. Debit Office supplies expense $700, credit Asset:  Office Supplies $700

b. Debit Office supplies expense $300, credit Asset:  Office Supplies $300

c. Debit Asset:  Office supplies $700, Credit Office supplies expense $700

d. Debit Asset:  Office supplies $300, Credit Office supplies expense  $700

10.   R. Sparks business had purchased a one year insurance policy for $1,200. The business had recorded the cost of $1,200 to the asset:  Prepaid Insurance.  An adjusting entry for the one month expiration of insurance would be:

a. Debit Prepaid Insurance $1,200, Credit Cash $1,200

b. Debit Prepaid Insurance $1,200, Credit Insurance expense $1,200

c. Debit Insurance expense $100, Credit Prepaid Insurance $100

d. Debit Prepaid Insurance $100, Credit Insurance expense $100