Bostel wanted to expand the size of its warehouse in order to generate more profits. The company decided to purchase the building adjacent to its existing warehouse. The company pays for the building by borrowing from the bank. The purchase would be recorded as:

A) Debit Cash; credit Notes Payable.

B) Debit Buildings; credit Cash.

C) Debit Buildings; credit Notes Payable.

D) Debit Cash and Buildings; credit Notes Payable.

Answer: C

On July 7, Saints Incorporated received $10,000 in cash from a customer for services to be provided on October 10. Which of the following describes how the transaction should be recorded on July 7?

A) Debit Cash $10,000, credit Service Revenue $10,000.

B) Debit Accounts Receivable $10,000, credit Service Revenue $10,000.

C) Debit Cash $10,000, credit Deferred Revenue $10,000.

D) Debit Deferred Revenue $10,000, credit Cash $10,000.

Answer: C

On December 1, Bears Lawn Maintenance, Inc. signed a contract with a retailer to supply maintenance for the next calendar year. How should this transaction be recorded on December 1?

A) Debit Cash, credit Service Revenue.

B) Debit Cash, credit Accounts Receivable.

C) Debit Accounts Receivable, credit Service Revenue.

D) No transaction should be recorded on December 1.

Answer: D

Sooner purchased office supplies on account. The transaction would be recorded as:

A) Debit Supplies, Credit Cash

B) Debit Cash, Credit Accounts Payable

C) Debit Accounts Payable, Credit Supplies

D) Debit Supplies, Credit Accounts Payable

Answer: D

Tomlin & Company provides music for special occasions. On January 14, the Smith family hired Tomlin for an upcoming family wedding for an agreed-upon fee of $10,000. The wedding was scheduled for May 23. As part of the agreement, the Smiths paid Tomlin half of the fee at the end of April with the remaining amount due by the end of June. How would Tomlin record the receipt of the final payment in June?

A) Credit to Accounts Receivable.

B) Credit to Service Revenue.

C) Credit to Cash.

D) Debit to Deferred Revenue.

Answer: A

Clement Company paid an account payable related to a previous utility bill of $1,000. This transaction should be recorded as follows on the payment date:

A) Debit Accounts Payable $1,000, credit Cash $1,000.

B) Debit Cash $1,000, credit Accounts Payable $1,000.

C) Debit Utilities Expense $1,000, credit Cash $1,000.

D) Debit Cash $1,000, credit Utilities Expense $1,000.

Answer: A

Incurring an expense for advertising on account would be recorded by:

A) Debiting a liability account.

B) Crediting an asset account.

C) Debiting an expense account.

D) Debiting an asset account.

Answer: C