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Question 1: Proficient: Describe the steps in recording and posting the effects of a business transaction and provide some examples of source documents used in these steps. A company begins a business transaction as a result of a management decision. The company transaction is evidenced by a source document. The information obtained from source documents provides a starting point to prepare a journal entry. After the journal entry is prepared, it is posted to accounts in the ledger. Some examples of source documents used in these steps are bills received from suppliers for goods/services rendered, bills sent to customers for goods sold/services performed, and cash register tapes. Define debit and credit and name the types of…show more content…
Describe three examples of transactions that would affect a firm's income statement. For each transaction, identify if the transaction has a positive or negative effect on the firm's net income. Revenues is the amount of money a company receives for goods or services rendered. This type of transaction has a positive effect on net income. Expenses are costs that a business obtains through its operations to earn revenue. This has a negative effect on net income. Profit is a financial gain after expenses and revenues are taken into account. This has a positive effect on net income. Question 4: Proficient: Are the following possibilities conceivable in an entry involving only one debit and one credit? Please explain your response for each item. Provide five or six correct responses: Increase a liability and increase an expense. Credits increase a liability and Debits increase an expense. Increase an asset and decrease a liability. Debits increase assets and decrease liabilities. Increase revenue and decrease an expense. Credits increase revenue and expenses. Decrease an asset and increase another asset. Credits decrease an asset and increase another asset. Decrease an asset and increase a liability. Credits decrease an asset and increase liabilities. Decrease revenue and decrease an asset. Debits decrease revenue and credits decrease assets. Decrease a liability and increase revenue. Debits decrease liabilities and credits increase

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