Exam 2: Financial Statements and the Accounting System

At the beginning of January of the current year,Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable.During January,the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500.Additionally,during January one customer paid Mikey $5,000 for services to be provided in the future.At the end of January,the balance in the accounts receivable account should be:

Funky Music purchased $25,000 of equipment for cash.The Equipment asset account is ________ for $25,000 and the Cash account is ________ for $25,000.

Posting is the transfer of journal entry information to the ledger.

An unclassified balance sheet broadly groups accounts into assets,liabilities,and equity

Unearned revenues are generally:

Dividends always decrease equity.

The debt ratio of Jackson's Shoes is .9 and the debt ratio of Billy's Catering is 1.0.Based on this information,an investor can conclude:

Credits always increase account balances.

Identify the accounts that would normally have balances in the credit column of a business's trial balance.

A record containing all the separate accounts for a company as well as all of their balances is called the ________.

Andrea Apple opened Apple Photography on January 1 of the current year.During January,the following transactions occurred and were recorded in the company's books: 1.Andrea invested $13,500 cash in the business in exchange for common stock. 2.Andrea contributed $20,000 of photography equipment to the business. 3.The company paid $2,100 cash for an insurance policy covering the next 24 months. 4.The company received $5,700 cash for services provided during January. 5.The company purchased $6,200 of office equipment on credit. 6.The company provided $2,750 of services to customers on account. 7.The company paid cash of $1,500 for monthly rent. 8.The company paid $3,100 on the office equipment purchased in transaction #5 above. 9.Paid $275 cash for January utilities. Based on this information,the balance in the cash account at the end of January would be:

Happiness Catering has total assets of $385 million.Its total liabilities are $100 million and its equity is $285 million.Calculate its debt ratio.

Lu Lu's Catering has a debt ratio equal to .3 and its competitor,Able's Bakery,has a debt ratio equal to .7.Determine the statement below that is correct.

If Taylor Willow,the sole stockholder of Willow Hardware,uses cash of the business to purchase a family automobile,the business should record this use of cash with an entry to:

The income statement,statement of retained earnings,and statement of cash flows report financial performance over a period of time.

Explain debits and credits and their role in the accounting system of a business.

To increase an asset account,we would ________ it and to increase a liability account,we would ________ it.

Willow Rentals purchased $800 of office supplies on credit.Which of the following general journal entries will Willow Rentals make to record this transaction?

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

For each of the accounts in the following table (1)identify the type of account as an asset,liability,equity,revenue,or expense,and (2)identify the normal balance of the account.