Question 1

Revenues always increase equity.

Accepted Answer

A) True 
 B)False

Question 2

A revenue account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 3

Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is________ for $25,000 and the Cash account is ________ for $25,000.

Accepted Answer

debited; c

Question 4

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a

Accepted Answer

A)  Debit to Cash for $300. 
B)  Debit to Accounts Payable for $300. 
C)  Credit to Telephone Expense for $300. 
D)  Debit to Telephone Expense for $300. 
E)  Credit to Accounts Payable for $300. 
A)  Debit to Cash for $300. 
B)  Debit to Accounts Payable for $300. 
C)  Credit to Telephone Expense for $300. 
D)  Debit to Telephone Expense for $300. 
E)  Credit to Accounts Payable for $300.

Question 5

Jackson Consulting had the following accounts and balances at December 31: $\begin{array}{|l|c|c|}
\hline \text { Account } & \text { Debit } & \text { Credit } \
\hline \text { Cash } & \$ 20,000 & \
\hline \text { Accounts Receivable } & 6,000 & \
\hline \text { Prepaid Insurance } & 1,500 & \
\hline \text { Supplies } & 5,000 & \
\hline \text { Accounts Payable } & & \$ 500 \
\hline \text { R. Jackson, Capital } & & 16,200 \
\hline \text { R. Jackson, Withdrawals } & 1,000 & \
\hline \text { Service Revenue } & & 20,000 \
\hline \text { Utilities Expense } & 2,000 & \
\hline \text { Salaries Expense } & 1,200 & \
\hline \text { Totals } & \$ 36,700 & \$ 36,700 \
\hline
\end{array}$
 Using the information in the table, calculate Jackson Consulting's reported net income for the period.

Accepted Answer

A)  $16,800 
B)  $15,800. 
C)  $23,200 
D)  $10,300. 
E)  $15,300 
A)  $16,800 
B)  $15,800. 
C)  $23,200 
D)  $10,300. 
E)  $15,300

Question 6

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

Accepted Answer

The answer of ________ documents identify and describe transactions and...

Question 7

The balance column in a ledger account is:

Accepted Answer

A)  A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction. 
B)  Another name for the withdrawals account. 
C)  An account entered on the balance sheet. 
D)  An account used to record the transfers of assets from a business to its owner. 
E)  A column for showing the balance of the account after each entry is posted. 
A)  A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction. 
B)  Another name for the withdrawals account. 
C)  An account entered on the balance sheet. 
D)  An account used to record the transfers of assets from a business to its owner. 
E)  A column for showing the balance of the account after each entry is posted.

Question 8

"Unearned" accounts are liabilities that must be fulfilled.

Accepted Answer

A) True 
 B)False

Question 9

The right side of an account is called the debit side.

Accepted Answer

A) True 
 B)False

Question 10

Larry Matt completed these transactions during December of the current year:
 $\begin{array} { | l | l | } 
\hline \text { Dec. 1 } & \begin{array} { l } 
\text { Began a financial services practice by investing } \$ 15,000 \text { cash and office } \
\text { equipment having a } \$ 5,000 \text { value. }
\end{array} \
\hline 2 & \text { Purchased } \$ 1,200 \text { of office equipment on credit. } \
\hline 3 & \text { Purchased } \$ 300 \text { of office supplies on credit. } \
\hline
\end{array}$
$\begin{array}{|l|l|}
\hline 4 & \begin{array}{l}
\text { Completed work for a client and immediately received a payment of } \$ 900 \
\text { cash. }
\end{array} \
\hline 8 & \text { Completed work for Precept Paper Co. on credit, } \$ 1,700 . \
\hline 10 & \text { Paid for the supplies purchased on credit on December } 3 . \
\hline 14 & \text { Paid for the annual } \$ 960 \text { premium on an insurance policy. } \
\hline 18 & \begin{array}{l}
\text { Received payment in full from Precept Paper Co. for the work completed on } \
\text { December } 8 .
\end{array} \
\hline 27 & \text { Larry withdrew } \$ 650 \text { cash from the practice to pay personal expenses. } \
\hline 30 & \text { Paid } \$ 175 \text { cash for the December utility bills. } \
\hline 30 & \text { Received } \$ 2,000 \text { from a client for financial services to be rendered next year. } \
\hline
\end{array}$
 Prepare general journal entries to record these transactions.

Accepted Answer

The answer of Larry Matt completed these transactions during December...

Question 11

Mary Martin, the owner of Martin Consulting, started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction.

Accepted Answer

A)  $$\begin{array} { | l | r | l | } 
\hline \text { Investments } & 40,000 & \
\hline \text { M. Martin, Capital } & & 40,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 40,000 & \
\hline \text { M. Martin, Capital } & & 40,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { M. Martin, Capital } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Investments } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 40,000 & \
\hline \text { Increased Equity } & & 40,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | l | } 
\hline \text { Investments } & 40,000 & \
\hline \text { M. Martin, Capital } & & 40,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | l | } 
\hline \text { Cash } & 40,000 & \
\hline \text { M. Martin, Capital } & & 40,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { M. Martin, Capital } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Investments } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 40,000 & \
\hline \text { Increased Equity } & & 40,000 \
\hline
\end{array}$$

Question 12

Match between columns
                        Premises:  Salary Expense
 Cash
 Equipment
 Owner, Capital
 Fees Revenue
 Accounts Receivable
 Accounts Payable
 Owner, Withdrawals
 Supplies
 Unearned Revenue
 Prepaid Insurance
 Office Furniture

Accepted Answer

The Answer of revenue (R) and expense (E) and asset is...

Question 13

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was ________. (round to one decimal place)

Accepted Answer

The answer of Jackson Brown Footwear had total liabilities of...

Question 14

A debit:

Accepted Answer

A)  Always decreases an account. 
B)  Is the left-hand side of a T-account. 
C)  Is not needed to record a transaction. 
D)  Is the right-hand side of a T-account. 
E)  Always increases an account. 
A)  Always decreases an account. 
B)  Is the left-hand side of a T-account. 
C)  Is not needed to record a transaction. 
D)  Is the right-hand side of a T-account. 
E)  Always increases an account.

Question 15

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

Accepted Answer

A)  A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense. 
B)  A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash. 
C)  A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable. 
D)  An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash. 
E)  A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash. 
A)  A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense. 
B)  A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash. 
C)  A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable. 
D)  An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash. 
E)  A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.

Question 16

An account balance is:

Accepted Answer

A)  Assets = liabilities + equity. 
B)  Always a credit. 
C)  The difference between the total debits and total credits for an account including the beginning balance. 
D)  The total of the debit side of the account. 
E)  The total of the credit side of the account. 
A)  Assets = liabilities + equity. 
B)  Always a credit. 
C)  The difference between the total debits and total credits for an account including the beginning balance. 
D)  The total of the debit side of the account. 
E)  The total of the credit side of the account.

Question 17

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.

Accepted Answer

A) True 
 B)False

Question 18

Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:

Andrea invested $13,500 cash in the business.
Andrea contributed $20,000 of photography equipment to the business.
The company paid $2,100 cash for an insurance policy covering the next 24 months. The company received $5,700 cash for services provided during January.
The company purchased $6,200 of office equipment on credit.
The company provided $2,750 of services to customers on account. The company paid cash of $1,500 for monthly rent.
The company paid $3,100 on the office equipment purchased in transaction #5 above. Paid $275 cash for January utilities.
-
Based on this information, the balance in the A. Apple, Capital account reported on the Statement of Owner's Equity at the end of the month would be:

Accepted Answer

A)  $39,200. 
B)  $40,175. 
C)  $31,150. 
D)  $30,875. 
E)  $31,400. 
A)  $39,200. 
B)  $40,175. 
C)  $31,150. 
D)  $30,875. 
E)  $31,400.

Question 19

Preparation of a trial balance is the first step in processing a financial transaction.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  The owner's withdrawals account. 
B)  The owner's capital account. 
C)  A revenue account. 
D)  An expense account. 
E)  A liability account. 
A)  The owner's withdrawals account. 
B)  The owner's capital account. 
C)  A revenue account. 
D)  An expense account. 
E)  A liability account.

Exam 2: Analyzing and Recording Transactions

Revenues always increase equity.

A revenue account normally has a debit balance.

Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is________ for $25,000 and the Cash account is ________ for $25,000.

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a

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

The balance column in a ledger account is:

"Unearned" accounts are liabilities that must be fulfilled.

The right side of an account is called the debit side.

Mary Martin, the owner of Martin Consulting, started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction.

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was ________. (round to one decimal place)

A debit:

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

An account balance 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.

Preparation of a trial balance is the first step in processing a financial transaction.

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

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

Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is for $25,000 and the Cash account is for $25,000.