Multiple choice

1. A&M Co. provided services of $1,000,000 to clients on account. How does this transaction affect A&M's accounts? (Points : 2)

1- Increase accounts receivable and cash by $1,000,000 each

2- Increase accounts receivable and revenues by $1,000,000 each

3-Increase accounts receivable and unearned revenues by $1,000,000 each

4-No effect at this time

2. The __________ is prepared with various sections, subsections, and captions that aid in its interpretation and analysis. (Points : 2)

1- accounting equation

2- retained earnings statement

3- intangible asset section

4- classified balance sheet

3. A&M Co. purchased land for $50,000 with $10,000 paid in cash and $40,000 in a note payable due three years from now. What effect does this transaction have on the accounts under the accrual basis of accounting? (Points : 2)

1- Net increase in assets of $40,000 and a net increase in liabilities of $40,000

2-Net increase in assets and liabilities of $50,000

3-Net increase in assets of $50,000 and a net decrease in liabilities of $40,000

4-Net increase in assets of $60,000 and a net decrease in liabilities of $40,000

4. Accrued expenses are ordinarily reported on the balance sheet as (Points : 2)

1 assets.

2 liabilities.

3 fixed assets.

4 prepaid expenses.