Problem 1. Cram Company collected $42,000 cash on its accounts receivable. The effects of this…


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Problem 1. Cram Company collected $42,000 cash on its accounts receivable. The effects of this transaction as reflected in the accounting equation are:
A. Total assets decrease and equity increases.

B. Both total assets and total liabilities decrease.

C. Total assets, total liabilities, and equity are unchanged.

D. Both total assets and equity are unchanged and liabilities increase.

E. Total assets increase and equity decreases.

Problem 2. The following information is available for the T.T. Agency. After these closing entries what will be the balance in the Tom Trey, Capital account?

Total revenues                   $ 125,000
Total expenses                       60,000
Tom Trey, Capital                   80,000
Tom Trey, Withdrawals            15,000

A. $ 65,000.

B. $ 80,000.

C. $130,000.

D. $145,000.

E. $280,000.

Problem 3. The special account used only in the closing process to temporarily hold the amounts of revenues and expenses before the net difference is added to (or subtracted from) the owner’s capital account is the:

A. Income Summary account.

B. Closing account.

C. Balance column account.

D. Contra account.

E. Nominal account.

Problem 4. Which of the following groups of accounts are not balance sheet accounts?
A. Assets.

B. Liabilities.

C. Revenues.

D. Equity accounts.

E. All of the above are balance sheet accounts.

Problem 5. Party Rentals purchased office supplies on credit. The general journal entry made by Party Rentals will include a:

A. Debit to Accounts Payable.

B. Debit to Accounts Receivable.

C. Credit to Cash.

D. Credit to Accounts Payable.

E. Credit to Party Rentals, Capital.