Question 1

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

Accepted Answer

A) True 
 B)False

Question 2

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Accepted Answer

A) 38.6%. 
B) 13.4%. 
C) 34.9%. 
D) 25.9%. 
E) 14.9%. 
A) 38.6%. 
B) 13.4%. 
C) 34.9%. 
D) 25.9%. 
E) 14.9%.

Question 3

Indicate whether a debit or credit entry would be required to record the following changes in each account.
a.To decrease Cash
b.To increase Common Stock
c.To decrease Accounts Payable.
d.To increase Salaries Expense.
e.To decrease Supplies.
f.To increase Revenue.
g.To decrease Accounts Receivable.
h.To increase Dividends.

Accepted Answer

a.Credit,b.Credit,c.

Question 4

Debits increase asset and expense accounts.

Accepted Answer

A) True 
 B)False

Question 5

A company's formal promise to pay (in the form of a promissory note)a future amount is a(n):

Accepted Answer

A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable. 
A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable.

Question 6

When a company bills a customer for $700 for services rendered,the journal entry to record this transaction will include a $700 debit to Services Revenue.

Accepted Answer

A) True 
 B)False

Question 7

For each of the following (1)identify the type of account as an asset,liability,equity,revenue,or expense,and (2)identify the normal balance of the account.
 $\begin{array}{|l|l|l|}
\hline \text { Account Title } & \text { Account Type } & \begin{array}{l}
\text { Normal Balance } \
\text { (Debit or Credit) }
\end{array} \
\hline \text { a. Prepaid Insurance } & & \
\hline \text { b. Accounts Payable } & & \
\hline \text { c. Common Stock } & & \
\hline \text { d. Utilities Expense } & & \
\hline \text { e. Land } & & \
\hline \text { f. Services Revenue } & & \
\hline \text { g. Notes Receivable } & & \
\hline \text { h. Advertising Expense } & & \
\hline \text {i. inearned Revenue } & & \
\hline \text {j. Service Revenue } & & \
\hline
\end{array}$

Accepted Answer

The answer of For each of the following (1)identify the...

Question 8

Debit means increase and credit means decrease for all accounts.

Accepted Answer

A) True 
 B)False

Question 9

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

Accepted Answer

A) True 
 B)False

Question 10

Identify the account below that is classified as a liability in a company's chart of accounts:

Accepted Answer

A) Cash 
B) Unearned Revenue 
C) Salaries Expense 
D) Accounts Receivable 
E) Supplies 
A) Cash 
B) Unearned Revenue 
C) Salaries Expense 
D) Accounts Receivable 
E) Supplies

Question 11

A company provided $12,000 of consulting services to a customer on account.The customer promises payment in 30 days.Identify the journal entry below that properly records this transaction.

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Consulting services revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|l|}
\hline \text { Accounts payable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Accounts receivable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|l|}
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Consulting services revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|l|}
\hline \text { Accounts payable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting services revenue } & & 12,000 \
\hline
\end{array}$

Question 12

Identify the statement below that is correct.

Accepted Answer

A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable. 
A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable.

Question 13

The following transactions occurred during July: 1.Received $900 cash for services provided to a customer during July.
2.Received $2,200 cash investment from Bob Johnson,the owner of the business.
3.Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4.Provided services to a customer on credit,$375.
5.Borrowed $6,000 from the bank by signing a promissory note.
6.Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A) $ 900. 
B) $ 1,275. 
C) $ 2,525. 
D) $ 3,275. 
E) $ 11,100. 
A) $ 900. 
B) $ 1,275. 
C) $ 2,525. 
D) $ 3,275. 
E) $ 11,100.

Question 14

Annie's Catering received $800 cash from a customer for catering services to be provided next month.Given the choices below,determine the general journal entry that Annie's Catering will make to record the cash receipt.Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

Accepted Answer

A)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Catering Revenue } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Accounts Receivable } & & 800 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Unearned Catering Revenue } & & 800 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$ 
A)  $\begin{array}{|l|r|r|}
\hline \text { Unearned Catering Revenue } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Accounts Receivable } & & 800 \
\hline
\end{array}$ 
C)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Unearned Catering Revenue } & & 800 \
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$

Question 15

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Accepted Answer

A) True 
 B)False

Question 16

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

Accepted Answer

A) True 
 B)False

Question 17

The ________ is found by determining the difference between total debits and total credits for an account,including any beginning balance.

Accepted Answer

The answer of The ________ is found by determining the...

Question 18

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

Accepted Answer

A) True 
 B)False

Question 19

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

Accepted Answer

A) True 
 B)False

Question 20

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

Accepted Answer

A) Account. 
B) Trial balance. 
C) Journal. 
D) T-account. 
E) Balance column account. 
A) Account. 
B) Trial balance. 
C) Journal. 
D) T-account. 
E) Balance column account.

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Debits increase asset and expense accounts.

A company's formal promise to pay (in the form of a promissory note)a future amount is a(n):

When a company bills a customer for $700 for services rendered,the journal entry to record this transaction will include a $700 debit to Services Revenue.

Debit means increase and credit means decrease for all accounts.

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

Identify the account below that is classified as a liability in a company's chart of accounts:

A company provided $12,000 of consulting services to a customer on account.The customer promises payment in 30 days.Identify the journal entry below that properly records this transaction.

Identify the statement below that is correct.

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

The ________ is found by determining the difference between total debits and total credits for an account,including any beginning balance.

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

Introducing Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 2: Financial Statements and the Accounting System

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Debits increase asset and expense accounts.

A company's formal promise to pay (in the form of a promissory note)a future amount is a(n):

When a company bills a customer for $700 for services rendered,the journal entry to record this transaction will include a $700 debit to Services Revenue.

Debit means increase and credit means decrease for all accounts.

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

Identify the account below that is classified as a liability in a company's chart of accounts:

A company provided $12,000 of consulting services to a customer on account.The customer promises payment in 30 days.Identify the journal entry below that properly records this transaction.

Identify the statement below that is correct.

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

The ________ is found by determining the difference between total debits and total credits for an account,including any beginning balance.

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

Introducing Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters