Assume that $18,000 cash is paid for insurance to cover the next year. The appropriate debit and credit would be:

A) Debit Insurance Expense $18,000, credit Prepaid Insurance $18,000.

B) Debit Prepaid Insurance $18,000, credit Insurance Expense $18,000.

C) Debit Prepaid Insurance $18,000, credit Cash $18,000.

D) Debit Cash $18,000, credit Prepaid Insurance $18,000.

Answer: C

Providing services to customers for $1,000 on account is recorded as:

A) Debit Accounts Receivable $1,000, credit Service Revenue $1,000.

B) Debit Service Revenue $1,000, credit Cash $1,000.

C) Debit Cash $1,000, credit Accounts Receivable $1,000.

D) Debit Service Revenue $1,000, credit Accounts Receivable $1,000.

Answer: A

Issuing common stock for $5,000 cash is recorded as:

A) Debit Cash $5,000, credit Service Revenue $5,000.

B) Debit Cash $5,000, credit Common Stock $5,000.

C) Debit Cash $5,000, credit Dividends $5,000.

D) Debit Common Stock $5,000, credit Cash $5,000.

Answer: B

Purchasing equipment for $10,000 cash is recorded as:

A) Debit Cash $10,000, credit Equipment $10,000.

B) Debit Equipment $10,000, credit Notes Payable $10,000.

C) Debit Equipment $10,000, credit Cash $10,000.

D) Debit Notes Payable $10,000, credit Equipment $10,000.

Answer: C

When a company pays utilities of $1,800 in cash, the transaction is recorded as:

A) Debit Utilities Expense $1,800, credit Utilities Payable $1,800.

B) Debit Utilities Payable $1,800, credit Cash $1,800.

C) Debit Cash $1,800, credit Utilities Expense $1,800.

D) Debit Utilities Expense $1,800, credit Cash $1,800.

Answer: D

Assume that cash is paid for rent to cover the next year. The appropriate debit and credit would be:

A) Debit Rent Expense, credit Cash.

B) Debit Prepaid Rent, credit Rent Expense.

C) Debit Prepaid Rent, credit Cash.

D) Debit Cash, credit Prepaid Rent.

Answer: C

Summer Leasing received $12,000 from a customer to cover 24 months of rent in advance. How should Summer record this transaction?

A) Debit Prepaid Rent; credit Rent Expense.

B) Debit Cash; credit Deferred Revenue.

C) Debit Cash; credit Service Revenue.

D) Debit Rent Expense; credit Cash.

Answer: B