Exam 2: Analyzing for Business Transactions

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year ............ \1 14,000 \6 8,000 End of the year ...................... 135,000 73,000 If Jerry invested an additional $12,000 in the business and withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

On a trial balance, if the Debit and Credit column totals are equal, then:

An income statement reports the revenues earned less the expenses incurred by a business over a period of time.

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

The _______________________ is a record containing all accounts used by a company as well as the transactions and ending balances of each of the accounts.

Review the transactions below and identify those that would be posted as a credit in the ledger (The first one has been done for you):

Cash paid to stockholders by the business of a corporation and used for personal expenses, should be treated as an expense of the business.

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

A ____________ gives a complete record of each transaction in one place, and shows debits and credits for each transaction.

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:

The following trial balance is prepared from the general ledger of HG's Auto Maintenance, Inc. HG'S AUTO MAINTENANCE, Inc. Trial Balance October 31 Cash Accounts receivable Supplies Shop equipment Office equipment Accounts payable Common stock Dividends Repair fees earned Supplies expense Totals Debit Credit \ 1,975 2,800 500 13,000 6,600 \ 4,510 22,000 4,200 11,875 8,600 Because the trial balance did not balance, you decided to examine the accounting records. You found that the following errors had been made: 1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable. 2. An investment of $500 cash by the owner was debited to Common Stock and credited to Cash. 3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted from the computation. 4. One debit of $300 to the Dividends account was posted as a credit. 5. Office equipment purchased for $800 was posted to the Shop Equipment account. 6. One entire entry was not posted to the general ledger. The transaction involved the receipt of $125 cash for repair services performed for cash. Prepare a corrected trial balance for the HG's Auto Maintenance, Inc.e as of October 31.

At the beginning of the current year, Trenton Company Inc.'s total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in stockholders' equity during the year and total assets at the end of the year were $260,000. Trenton Company's debt ratio at the end of the current year is:

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.

An account balance is:

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.