Question 1

Owner's withdrawals are not reported on a business's income statement.

Accepted Answer

A) True 
 B)False

Question 2

Identify by marking an X in the appropriate column, whether each of the following items would likely serve as a source document. The first one is done as an example.
 $$\begin{array} { | l | l | l | l | } 
\hline & & \text { Yes } & \text { No } \
\hline \text { Ex. } & \text { Credit card } & & \text { X } \
\hline \text { a. } & \text { Credit card receipt } & & \
\hline \text { b. } & \text { Purchase order } & & \
\hline \text { c. } & \text { Invoice } & & \
\hline \text { d. } & \text { Balance sheet } & & \
\hline \text { e. } & \text { Bank statement } & & \
\hline \text { f. } & \text { Journal entry } & & \
\hline \text { g. } & \text { Telephone bill } & & \
\hline \text { h. } & \text { Employee earnings record } & & \
\hline
\end{array}$$

Accepted Answer

\[\begin{array} { | l | l | l | l | } 
\

Question 3

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

Accepted Answer

A)  28.5%. 
B)  26.0%. 
C)  58.8%. 
D)  38.5%. 
E)  35.1%. 
A)  28.5%. 
B)  26.0%. 
C)  58.8%. 
D)  38.5%. 
E)  35.1%.

Question 4

J. Smith withdrew $100 from Jay's Limo Services for personal use. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith, Capital } & 100 & \
\hline \text { J. Smith, Withdrawals } & & 100 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith, Withdrawals } & 100 & \
\hline \text { J. Smith, Capital } & & 100 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { J. Smith. Withdrawals } & & 100 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { J. Smith, Capital } & & 100 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith. Withdrawals } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith, Capital } & 100 & \
\hline \text { J. Smith, Withdrawals } & & 100 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith, Withdrawals } & 100 & \
\hline \text { J. Smith, Capital } & & 100 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { J. Smith. Withdrawals } & & 100 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { J. Smith, Capital } & & 100 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { J. Smith. Withdrawals } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$$

Question 5

Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

Accepted Answer

Debt Ratio = Total L

Question 6

A law firm collected $1,800 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?

Accepted Answer

A)  Debit Cash, $1,800; credit Accounts Receivable, $1,800. 
B)  Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800. 
C)  Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800. 
D)  Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800. 
E)  Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800. 
A)  Debit Cash, $1,800; credit Accounts Receivable, $1,800. 
B)  Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800. 
C)  Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800. 
D)  Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800. 
E)  Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.

Question 7

Joe Jackson opened Jackson's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: Jackson invested $25,000 cash in the business.

Jackson contributed $100,000 of equipment to the business.
The company paid $2,000 cash to rent office space for the month of March. The company received $16,000 cash for repair services provided during March. The company paid $6,200 for salaries for the month of March.
The company provided $3,000 of services to customers on account. The company paid cash of $500 for utilities for the month of March.
  The company received $3,100 cash in advance from a customer for repair services to be provided in April.
Jackson withdrew $5,000 for his personal use from the company.
Based on this information, net income for March would be:

Accepted Answer

A)  $8,400. 
B)  $13,500. 
C)  $5,300. 
D)  $13,400. 
E)  $10,300. 
A)  $8,400. 
B)  $13,500. 
C)  $5,300. 
D)  $13,400. 
E)  $10,300.

Question 8

If an owner's capital account had a $10,000 credit balance at the beginning of the period, and during the period, the owner invests an additional $5,000, the balance in the capital account listed on the trial balance will be equal to a debit balance of $5,000.

Accepted Answer

A) True 
 B)False

Question 9

Expenses always decrease equity.

Accepted Answer

A) True 
 B)False

Question 10

The process of transferring general journal entry information to the ledger is called:

Accepted Answer

A)  Journalizing. 
B)  Double-entry accounting. 
C)  Balancing. 
D)  Posting. 
E)  Balancing an account. 
A)  Journalizing. 
B)  Double-entry accounting. 
C)  Balancing. 
D)  Posting. 
E)  Balancing an account.

Question 11

The chronological record of each complete transaction that has occurred is called the:

Accepted Answer

A)  Journal. 
B)  Trial balance. 
C)  Ledger. 
D)  Account balance. 
E)  Cash account. 
A)  Journal. 
B)  Trial balance. 
C)  Ledger. 
D)  Account balance. 
E)  Cash account.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Owner withdrawals always decrease equity.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

Using the following list of accounts and identification letters A through J for Homer's Management Co., enter the type of account and its normal balance into the table below. The first item is filled in as an example:
A. Homer, Capital F. Prepaid Rent
B. Interest Payable G. Advertising Expense
C. Land H. Unearned Rent Revenue
D. Homer, Withdrawals I. Commissions Earned
E. Fees Earned J. Notes Receivable

Accepted Answer

The answer of Using the following list of accounts and...

Question 16

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

Accepted Answer

Debt Ratio = Total L

Question 17

Source documents identify and describe transactions and events entering the accounting process.

Accepted Answer

A) True 
 B)False

Question 18

Explain debits and credits and their role in the accounting system of a business.

Accepted Answer

Debit refers to the left side of an acco

Question 19

An owner's withdrawal account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 20

Unearned revenues refer to a(n):

Accepted Answer

A)  Expense incurred because a customer has paid in advance. 
B)  Increase in revenues as a result of delivering products or services to a customer. 
C)  Liability that is settled in the future when a company delivers its products or services. 
D)  Decrease in an asset. 
E)  Asset that will be used over time. 
A)  Expense incurred because a customer has paid in advance. 
B)  Increase in revenues as a result of delivering products or services to a customer. 
C)  Liability that is settled in the future when a company delivers its products or services. 
D)  Decrease in an asset. 
E)  Asset that will be used over time.

Exam 2: Analyzing and Recording Transactions

Owner's withdrawals are not reported on a business's income statement.

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

J. Smith withdrew $100 from Jay's Limo Services for personal use. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

A law firm collected $1,800 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?

If an owner's capital account had a $10,000 credit balance at the beginning of the period, and during the period, the owner invests an additional $5,000, the balance in the capital account listed on the trial balance will be equal to a debit balance of $5,000.

Expenses always decrease equity.

The process of transferring general journal entry information to the ledger is called:

The chronological record of each complete transaction that has occurred is called the:

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

Owner withdrawals always decrease equity.

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

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

Source documents identify and describe transactions and events entering the accounting process.

Explain debits and credits and their role in the accounting system of a business.

An owner's withdrawal account normally has a debit balance.

Unearned revenues refer to a(n):

Accounting in Business

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets Natural Resoures and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Present and Future Values in Accounting

Activity-Based Costing

Filters