Question Details

Which of the following transactions decreases both assets and owner's equity



1.	When a company receives an electric bill but does not pay it right away, what is the required journal entry to be recorded?
a.	Utilities Expense - Debit; Accounts Receivable - Credit
b.	No entry is required until the bill is paid.
c.	Utilities Expense - Debit; Accounts Payable - Credit
d.	Accounts Payable - Debit; Utilities Expense - Credit




	2.	When a magazine company receives advance payment for a subscription, what is the required journal entry to be recorded?
a.	Cash - Debit; Unearned Subscriptions Revenue - Credit
b.	Prepaid Subscriptions - Debit; Cash - Credit
c.	Cash - Debit; Subscriptions Revenue - Credit
d.	Unearned Subscriptions Revenue - Debit; Cash - Credit



	3.	When a service has been performed, but no cash has been received, which of the following statements is true?
a.	The entry would include a debit to Accounts Receivable.
b.	No journal entry would be made.
c.	The entry would include a debit to Accounts Payable.
d.	The entry would include a credit to Unearned Revenue.



	4.	Which of the following transactions decreases both assets and owner's equity?
a.	Withdrawal of cash by the owner
b.	Advance payment made for insurance
c.	Receipt of a phone bill, to be paid at a later time
d.	Payment of a liability



	5.	A $4,000 machine is purchased by paying $1,000 cash and issuing a promissory note for the remainder. The journal entry should include a
a.	credit to Machinery.
b.	credit to Notes Payable.
c.	credit to Notes Receivable.
d.	debit to Cash.



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