Double Entry Accounting

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Double Entry Accounting

Practice Excercise Results
1. Your company buys a new forklift for $500 cash. The entry for this transaction should be:
A debit of $500 to cash and a credit of $500 to sales
A debit of $500 to cash and a $500 credit to equipment
A credit of $500 to cash and a debit of $500 to equipment
None of the above

2. You borrow $750,000 on a 90-day note. The money is deposited into checking. The entry for this transa
A debit of $750,000 to cash and a credit of $750,000 to notes payable
A credit of $750,000 to cash and a debit of $750,000 to notes payable
A debit of $750,000 to cash and a debit of $750,000 to interest expense
None of the above

3. A customer buys a product from you for $350 and promises to pay you in 30 days. The customer already
The entry for this transaction is:
A credit of $350 to sales and a debit of $350 to cash
A credit of $350 to sales and a debit of $350 to accounts payable
A debit of $350 to sales and a credit of $350 to accounts receivable
None of the above

4. Your company buys some materials to use in producing a product that it sells. The cost of the materials
vendor in 30 days. The entry for this transaction is:
A debit of $350 to materials expense and a credit of $350 to accounts payable
A credit of $350 to materials expense and a debit of $350 to accounts payable
A debit of $350 to materials expense and a credit of $350 to accounts receivable
A credit of $350 to materials expense and a debit of $350 to accounts receivable
None of the above

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The Accounting Equation

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Assets = Liabilities + Owners' Equity

Practice Excercise Results
1. A share of stock in General Motors that your company owns would be:
A liability
Owners' equity
An asset
None of the above

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All of the above

2. A company has $1,000,000 Owners' Equity and $75,000 in liabilities. What are the assets for the compa
$1,000,000
$75,000
$925,000
None of the above

3. A company has cash in the bank of $850,000, inventory of $50,000 and a building worth $100,000. The
The company has liabilities that amount to $925,000. How much is owners' equity in this company?
$1,000,000
$75,000
$925,000
None of the above

4. Which of the following is not an asset:

Retained earnings
A roto-tiller
A stapler
20 kilos of fertilizer
All of the above

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The Balance Sheet

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Overview of the Balance Sheet

Practice Excercise Results
1. Accounts receivable would be considered:
A liability
A fixed asset
A current asset
None of the above

2. Common equity includes:

Common stock
Capital surplus
Retained earnings
All of the above
None of the above

3. Preferred stock would be considered:

A current liability
A long-term liability
Owners' equity
None of the above

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4. Intangible assets would include:

Goodwill
Patents
Trademarks
Organizational costs
All of the above
None of the above

5. Long-term liabilities are those that:

Are due in 1 year or more
Are due in 5 years or more
Are due in 10 years or more
None of the above

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