Exam 3: The Accounting Information System

Selected transactions for the Sleezer Company are listed below. List the number of the transaction and then describe the effect of each transaction on assets, liabilities, and stockholders' equity. Sample: Made initial cash investment in the business. The answer would be-Increase in assets and increase in stockholders' equity. 1. Paid monthly utility bill. 2. Purchased new display case for cash. 3. Paid cash for repair work on security system. 4. Billed customers for services performed. 5. Received cash from customers billed in transaction 4. 6. Dividends paid to owners. 7. Incurred advertising expenses on account. 8. Paid monthly rent. 9. Received cash from customers when service was rendered.

Describe the process of preparing a trial balance. What is the purpose of preparing a trial balance? If a trial balance does not balance, identify what might be the reasons why it does not balance. If the trial balance does balance, does that insure that the ledger accounts are correct? Explain.

Entering transactions into the journal is called posting.

For each item below, indicate whether a debit or credit applies.

A payment of a portion of an accounts payable will

Transactions are recorded in alphabetical order in a journal.

Selected transactions for Stockton Corporation during its first month in business are presented below: Sept. 1 Issued common stock in exchange for $30,000 cash received from investors. 5 Purchased equipment for $20,000, paying $2,000 in cash and the balance on account. 25 Paid $6,000 cash on balance owed for equipment. 30 Paid $1,000 cash dividend. Stockton's chart of accounts shows: Cash, Equipment, Accounts Payable, Common Stock, and Dividends. Instructions (a) Prepare a tabular analysis of the September transactions. The column headings should be: Cash + Equipment = Accounts Payable + Stockholders' Equity. For transactions affecting stockholders' equity, provide explanations in the right margin. (b) Journalize the transactions. Do not provide explanations. (c) Post the transactions to T-accounts.

Which pair of the listed accounts follows the rules of debits and credits in relation to increases and decreases in the opposite manner?

A debit to an account always indicates an increase in that account.

In recording accounting transactions, evidence that a transaction has taken place is obtained from

For each item below, indicate whether a debit or credit applies. 1. Increase in Accounts Payable $\quad$$\quad$$\quad$$\quad$ _____ 2. Increase in Accounts Receivable $\quad$$\quad$$\quad$ _____ 3. Increase in Retained Earnings $\quad$$\quad$$\quad$$\quad$ _____ 4. Decrease in Unearned Service Revenue $\quad$ _____ 5. Decrease in Interest Payable $\quad$$\quad$$\quad$$\quad$$\quad$ _____

The double-entry system requires that each transaction must be recorded

Which of the following accounts follows the rules of debit and credit in relation to increases and decreases in the opposite manner?

At January 31, 2014, the balance in Goebel Inc.'s supplies account was $700. During February. Goebel purchased supplies of $600 and used supplies of $800. At the end of February, the balance in the Supplies account should be

Which of the following accounts is increased with a debit?

Dividends are classified as an expense.

An account is often referred to as a T-account because of the way it is constructed.

The purchase or sale of long-lived assets used in operating the business is

The transactions of the Stormont Store are recorded in the general journal below. You are to post the journal entries to T-accounts and compute the August 31, 2014 balances.

Debits