HBX Core Harvard Business School Study Guide Test.
(liability) ACCOUNTS PAYABLE increases with a - CORRECT ANSWER Credit
(asset) CASH decreases with a - CORRECT ANSWER Credit
(asset) NOTES RECEIVABLE increases with a - CORRECT ANSWER Debit
(owners equity) COMMON STOCK decreases with a -...
HBX Core Harvard Business School
Study Guide Test.
(liability) ACCOUNTS PAYABLE increases with a - CORRECT ANSWER Credit
(asset) CASH decreases with a - CORRECT ANSWER Credit
(asset) NOTES RECEIVABLE increases with a - CORRECT ANSWER Debit
(owners equity) COMMON STOCK decreases with a - CORRECT ANSWER Debit
(asset) PROPERTY, PLANT & EQUIPMENT decreases with a - CORRECT ANSWER Credit
(liability) LONG TERM DEBT increases with a - CORRECT ANSWER Credit
(owners equity) RETAINED EARNINGS increases with a - CORRECT ANSWER Credit
(liability) WAGES PAYABLE increases with a - CORRECT ANSWER Credit
On June 1, 2013 Cardullo's purchased a case of Vermeiren Cookie Spread as inventory from its supplier
for $200 and paid in cash. - CORRECT ANSWER Debit Inventory for $200
Credit Cash for $200
Suppose your company receives a large order from your best customer. Should this be treated as
revenue and recorded on your company's books? - CORRECT ANSWER No, Because revenue is not
considered earned until a product or service is delivered.
RETAINED EARNINGS increases with a - CORRECT ANSWER Credit
, PROPERTY, PLANT & EQUIPMENT decreases with a - CORRECT ANSWER Credit
NOTES RECEIVABLE increases with a - CORRECT ANSWER Credit
How would you record this transaction on a T-account - CORRECT ANSWER
Which of the following is TRUE regarding journal entries: - CORRECT ANSWER The total amount debited
must equal the total amount credited
Wise Guys Consulting issues an invoice for $9,000 to one of their clients for services provided. The terms
of the invoice call for payment 30 days after the invoice date. What would be the impact at the date the
services are completed and invoiced? - CORRECT ANSWER The correct answer is to debit Accounts
Receivable (an asset) for $9,000 as the company now has the right to receive cash, and credit Revenue
(part of owners' equity) for $9,000 to recognize the revenue associated with the sale.
Like A Wrecking Ball is a demolition company. At the end of a project, they presented their client with an
invoice for $18,000 and immediately received a check for the full amount. What is the journal entry to
record this receipt? - CORRECT ANSWER The correct answer is to debit Cash for $18,000 as the company
now has the cash (remember--checks are considered cash!) and credit Revenue for $18,000 to recognize
the revenue associated with the services provided.
Keep You in the Know (KYK) magazine received $120,000 cash in annual subscriptions in December
2013. KYK is a monthly publication and all of these subscriptions commence in January 2014. What entry
should KYK make on December 31, 2013 to record the payments received for these subscriptions? -
CORRECT ANSWER The correct answer is to debit Cash for $120,000 as the company now has the cash,
and credit Deferred Revenue for $120,000 as the company now has the obligation to provide services in
the future.
Friends International is an NGO that fosters greater cultural awareness and understanding by arranging
for people of different backgrounds to spend time in other countries and cultures. On January 1, 2014
they purchase $80,000 of open airline tickets in advance that can be used for a variety of destinations
because they need the flexibility and savings provided by such tickets. What entry should Friends
International make to record this purchase? - CORRECT ANSWER The correct answer is to debit Prepaid
Expense for $80,000 as the company now has the right to receive benefits from the prepaid tickets and
credit Cash for $80,000 as the company no longer has the cash.
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