Exam 2: Accounting System and Financial Statements

Compute net income for May based on the following transactions: May 14 Paid $1,200 for two weeks wages. May 15 Performed $5,200 in consulting services on account. May 17 Billed a customer $1,500 for services performed May 16. May 20 Received $5,200 in payment for May 15 transaction. May 22 Performed services and immediately collected $2,000. May 31 Paid $500 for advertising in the local paper to take place in June.

A credit is used to record:

_______________ is the process of transferring journal entry information to the ledger.

The heading on each financial statement lists the three W's - Who (the name of the organization),What (the name of the statement),and Where (the organization's address)

High financial leverage is always bad for a company's owners.

Hamilton Industries has total liabilities of $105 million and total assets of $350 million.Its debt ratio is 333.3%.

The chart of accounts is a list of all the accounts used by a company and a corresponding identification number.

A balance column account is:

On December 3,the Matador Company paid $5,400 cash in salaries to office personnel.Prepare the general journal entry to record this transaction.

The balances for the accounts of Lance's Consulting Firm,Inc.for the year ended December 31 are shown below.Each account shown had a normal balance. -Calculate ending retained earnings.

A _______________ is a list of all the accounts used by a company and their identification codes.

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

Explain the debt ratio and its use in analyzing a company's financial condition.

The _______________________ is a record containing all accounts (with balances) used by a company.

A company had total assets of $350,000; total liabilities of $101,500; and total equity of $248,500.Calculate its debt ratio.

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

On October 31,a company's Cash account had a normal balance of $7,000.During October,the account was debited for a total of $4,250 and credited for a total of $5,340.What was the balance in the Cash account at the beginning of October?

Management Services,Inc.provides services to clients.On May 1,a client prepaid Management Services $60,000 for a six-month contract in advance.Management Services' journal entry to record this transaction will include a:

On September 30,the Cash account of Value Company had a normal balance of $5,000.During September,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of September?

Maria Sanchez began business as Sanchez Law Firm on November 1.Record the following November transactions by making entries directly to the T-accounts provided.Then,prepare a trial balance,as of November 30. a.Sanchez invested $15,000 cash and a law library valued at $6,000 in exchange for common stock. b.Purchased $7,500 of office equipment from Johnson Bros.on credit. c.Completed legal work for a client and received $1,500 cash in full payment. d.Paid Johnson Bros.$3,500 cash in partial settlement of the amount owed. e.Completed $4,000 of legal work for a client on credit. f.Paid a $2,000 cash dividend. g.Received $2,500 cash as partial payment for the legal work completed for the client in (e). h.Paid $2,500 cash for the legal secretary's salary.