For EFG Co., the transaction “Payment of quarterly taxes” would __________.
a. Increase the assets
b. Decrease the assets
c. Have no effect on the assets
Under accrual accounting, revenue is normally recognized when __________.
a. Cash is received
b. When it is greater that expenses
c. When a transaction is recorded
d. It is earned
On June 1st, Green Pea, Inc. purchased $1,200 worth of supplies on account. How does this transaction affect Green Pea’s accounts?
a. Increase supplies and accounts payable by $1,200
b. Increase supplies and decrease cash by $1,200
c. Increase supplies and decrease accounts payable by $1,200
d. No effect since cash has not been paid
In preparing a bank reconciliation, the amount of outstanding checks is added to the balance per bank statement.
Using a perpetual inventory system, the purchase of $30,000 of merchandise on account would include a(n):
a. increase in Sales
b. increase in Merchandise Inventory
c. decrease in Merchandise Inventory
d. decrease in Sales