Exam 3: The Double-Entry Accounting System

The following account balances prior to closing entries were taken from the records of Kendall Company: After closing entries at December 31,2016,Retained Earnings will be:

If a $600 credit to Revenue was posted as a $600 debit to Salaries Expense:

The type of transaction that would be represented by a debit to one asset and a credit to another is an asset source transaction.

What effect will the following entry have on Retained Earnings?

The Horowitz Corporation recorded a business event using T-accounts as follows: Which of the following reflects how this event affects the company's financial statements?

When a company receives cash in advance from a customer,it should debit Cash and credit Accounts Receivable.

The closing entry for the Dividends account would involve which of the following?

A high value of the debt to asset ratio may indicate that a company has a high level of debt risk.

Consider each of the following general journal entries independently.In the space provided,indicate whether the journal entry increases the ratio (I),decreases the ratio (D),or does not change the ratio (NC).Assume that each ratio is less than 1.0 before the entry is made.

A company's adjusted trial balance provides the information needed to prepare the balance sheet and income statement.

At the end of 2016,Valley Packaging Company's adjusted trial balance showed a zero balance in retained earnings.What is the most likely explanation for this?

What does the debt to assets ratio indicate with regard to the degree of a company's debt risk? Who would normally be most interested in this ratio?

Kincaid Company provided consulting service of $2,500 to a customer who paid $1,300 and promised to pay the remainder next month.Which of the following journal entries correctly records this transaction?

The Lazarus Company recorded the following adjustment in general journal form: Which of the following choices accurately reflects how this event would affect the company's financial statements?

The T-account format is also called the chart of accounts.

At the end of 2016,the following information is available for ABC Company and XYZ Company: Required: 1)For each company,calculate the debt to assets ratio and the return on equity ratio. 2)For each company,calculate the return on assets ratio. 3)Which company had a greater level of debt risk? Why? 4)What is financial leverage? Which company is using financial leverage more successfully?

What is the purpose of a trial balance?

What business event is represented by this journal entry?

A company's general ledger provides a chronological record of its business transactions.

The following is a list of all accounts and balances for the Jepson Corporation immediately prior to closing the books on December 31,2016. Required: Prepare a trial balance in proper form for the Jepson Corporation dated December 31,2016.