Question 1

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

Accepted Answer

A) True 
 B)False

Question 2

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the__________ .

Accepted Answer

The answer of The second step in the analyzing and...

Question 3

The numbering system used in a company's chart of accounts:

Accepted Answer

A)  Typically begins with balance sheet accounts. 
B)  Is the same for all companies. 
C)  Is determined by generally accepted accounting principles. 
D)  Typically begins with income statement accounts. 
E)  Depends on the source documents used in the accounting process. 
A)  Typically begins with balance sheet accounts. 
B)  Is the same for all companies. 
C)  Is determined by generally accepted accounting principles. 
D)  Typically begins with income statement accounts. 
E)  Depends on the source documents used in the accounting process.

Question 4

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 5

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

Accepted Answer

A)  $47,000. 
B)  $5,000. 
C)  $52,000. 
D)  $32,000. 
E)  $57,000. 
A)  $47,000. 
B)  $5,000. 
C)  $52,000. 
D)  $32,000. 
E)  $57,000.

Question 6

Identify the accounts that would normally have balances in the credit column of a business's trial balance

Accepted Answer

A)  Revenues and liabilities. 
B)  Liabilities and expenses. 
C)  Revenues and expenses. 
D)  Assets and revenues. 
E)  Withdrawals and liabilities. 
A)  Revenues and liabilities. 
B)  Liabilities and expenses. 
C)  Revenues and expenses. 
D)  Assets and revenues. 
E)  Withdrawals and liabilities.

Question 7

Identify the account below that is classified as an asset in a company's chart of accounts:

Accepted Answer

A)  Accounts Payable 
B)  Accounts Receivable 
C)  Owner's Capital 
D)  Unearned Revenue 
E)  Service Revenue 
A)  Accounts Payable 
B)  Accounts Receivable 
C)  Owner's Capital 
D)  Unearned Revenue 
E)  Service Revenue

Question 8

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Accepted Answer

A)  Drawing account. 
B)  Balance column sheet. 
C)  Withdrawals account. 
D)  Capital account. 
E)  T-account. 
A)  Drawing account. 
B)  Balance column sheet. 
C)  Withdrawals account. 
D)  Capital account. 
E)  T-account.

Question 9

A company's ledger is:

Accepted Answer

A)  A list of all accounts a company uses with an assigned identification number. 
B)  A collection of documents that describe transactions and events entering the accounting process. 
C)  A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item. 
D)  A journal in which transactions are first recorded. 
E)  A record containing all accounts and their balances used by the company. 
A)  A list of all accounts a company uses with an assigned identification number. 
B)  A collection of documents that describe transactions and events entering the accounting process. 
C)  A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item. 
D)  A journal in which transactions are first recorded. 
E)  A record containing all accounts and their balances used by the company.

Question 10

A double-entry accounting system is an accounting system:

Accepted Answer

A)  That may only be used if T-accounts are used. 
B)  That insures that errors never occur. 
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits. 
D)  That records the effects of transactions and other events in at least two accounts with equal debits and credits. 
E)  That records each transaction twice. 
A)  That may only be used if T-accounts are used. 
B)  That insures that errors never occur. 
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits. 
D)  That records the effects of transactions and other events in at least two accounts with equal debits and credits. 
E)  That records each transaction twice.

Question 11

Identify the item below that would cause the trial balance to not balance?

Accepted Answer

A)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750. 
B)  A $50 cash receipt for the performance of a service was not recorded at all. 
C)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
D)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies Normal 0 false false false EN-IN X-NONE X-NONE and $2,350 credit to Accounts Payable. 
E)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
A)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750. 
B)  A $50 cash receipt for the performance of a service was not recorded at all. 
C)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
D)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies Normal 0 false false false EN-IN X-NONE X-NONE and $2,350 credit to Accounts Payable. 
E)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200.

Question 12

For each of the following accounts, identify whether a debit or credit yields the indicated change
 a. To increase Fees Earned
b. To decrease Cash
c. To decrease Unearned Revenue
d. To increase Accounts Receivable
e. To increase Owner, Capital
f. To decrease Notes Payable
g. To increase Prepaid Rent
h. To increase Salaries Expense
i. To increase Accounts Payable
j. To decrease Prepaid Inswranee

Accepted Answer

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\hline \t

Question 13

Based on the following trial balance for Barry's Automotive Shop, prepare an income statement, statement of owner's equity, and a balance sheet. Barry made no additional investments in the company during the year.
Barry's Automotive Shop Trial Balance December 31
 $\begin{array}{|l|c|c|}
\hline \text { Cash } & \$ 12,500 \
\hline \text { Accounts receivable } & 1,500 \
\hline \text { Supplies } & 500 \
\hline \text { Repair shop equipment } & 27,000 \
\hline \text { Service truck } & 33,000 \
\hline \text { Accounts payable } &&\$2,600 \
\hline \text { Barry, Capita } &135&38,525 \
\hline
\end{array}$ $$\begin{array} { |l | r | r |} 
\hline \text { Barry. Capital } & & 38,525 \
\hline \text { Barry. Withdrawals } & 36,000 & \
\hline \text { Service revenue } & & 125,000 \
\hline \text { Supplies expense } & 3,425 & \
\hline \text { Rent expense } & 18,000 & \
\hline \text { Udilities expense } & 5,000 & \
\hline \text { Gas expense } & 7,200 & \
\hline \text { Wages expense } & 22,000 & \
\hline \text { Totals } & \$ 166,125 & \$ 166,125 \
\hline
\end{array}$$

Accepted Answer

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

Question 14

Which of the following statements is not true:

Accepted Answer

A)  Accounts receivable are increased by customer payments. 
B)  Accounts receivable are held by a seller. 
C)  Accounts receivable are classified as assets. 
D)  Accounts receivable are increased by billings to customers. 
E)  Accounts receivable arise from credit sales. 
A)  Accounts receivable are increased by customer payments. 
B)  Accounts receivable are held by a seller. 
C)  Accounts receivable are classified as assets. 
D)  Accounts receivable are increased by billings to customers. 
E)  Accounts receivable arise from credit sales.

Question 15

Jason Hope decided to open a hotel in his hometown. Prepare journal entries to record the following transactions. Hope uses the accounts Room Rental Revenue and Event Revenue. All expenses for special events are recorded as Event Expense. (Omit explanations.)

\(\begin{array} {| l | l |} 
\hline \text { June 1 } & \text { Hope invested } \$ 400,000 \text { into the business } \
\hline \text { June 2 } & \begin{array} { l } 
\text { Hope purchased an existing building and land for the hotel costing } \$ 900,000 . \
\text { The purchase appraisal allocated } \$ 100,000 \text { for land and } \$ 800,000 \text { to the } \
\text { building. Hope paid } \$ 250,000 \text { and financed the remainder with a mortgage } \
\text { note payable. }
\end{array} \
\hline \text { June 3 } & \text { Paid } \$ 6,000 \text { for a six month insurance policy on the hotel. } \
\hline \text { June 5 } & \text { Purchased linens and other supplies costing } \$ 4,000 \text { on account. } \
\hline \text { June 10 } & \begin{array} { l } 
\text { Received advance payments of } \$ 12,000 \text { from customers that will be staying a } \
\text { the hotel in July. Payments will be refunded if the customer cancels within 7 } \
\text { days of their scheduled arrival time. }
\end{array} \
\hline
\end{array}\)
 \[\begin{array} { | l | l | } 
\hline \text { June } 14 & \begin{array} { l } 
\text { Received cash payments of \$13,000 from current customers staying at the } \
\text { hotel in June. }
\end{array} \
\hline \text { June 15 } & \text { Paid the staff \$2,000 for the first semi-monthly payroll. } \
\hline \text { June 16 } & \text { Paid \$500 for general maintenance and repairs expense. } \
\hline \text { June 17 } & \text { Received \$10,000 payment for a wedding reception during the weekend } \
\hline \text { June 18 } & \begin{array} { l } 
\text { Paid the caterer \$2,500 for providing catering services for the wedding } \
\text { reception. }
\end{array} \
\hline \text { June 18 } & \text { Paid Fixture Rentals \$1,000 for table and chair rental. } \
\hline \text { June 19 } & \text { Paid the florist \$2,000 for flowers for the event. } \
\hline \text { June 24 } & \text { Paid for the linens and supplies purchased on June 5. } \
\hline \text { June 25 } & \text { Recorded an additional \$5,000 from current hotel customers for June. } \
\hline \text { June 30 } & \text { Paid the staff \$2,000 for the second semi-monthy payroll. } \
\hline \text { June 30 } & \text { The owner withdrew \$4,000 for persongl use. } \
\hline
\end{array}\]

Accepted Answer

@#IMG-DLM& \[\begin{array} { | l | l | l | l | }

Question 16

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Accepted Answer

A)  $$\begin{array} { | l | l | l | } 
\hline \text { No journal entry is required } & & \
\hline & & \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Accounts Payable } & & 400 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | l | l | } 
\hline \text { No journal entry is required } & & \
\hline & & \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Accounts Payable } & & 400 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$$

Question 17

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies Expense } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies Expense } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Cash } & & 7,000 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$$ 
E)  $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$$

Question 18

You increase the Service Revenue account on the ________ side of its account.

Accepted Answer

The answer of You increase the Service Revenue account on...

Question 19

At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of: 
Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The owner's total investment for this first month was $5,000. There were no owner withdrawals in the first month.
Calculate the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity.

Accepted Answer

A)  $20,000 
B)  $7,000 
C)  $30,000 
D)  $5,000 
E)  $25,000 
A)  $20,000 
B)  $7,000 
C)  $30,000 
D)  $5,000 
E)  $25,000

Question 20

Posting is the transfer of journal entry information to the ledger.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing and Recording Transactions

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the__________ .

The numbering system used in a company's chart of accounts:

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

Identify the accounts that would normally have balances in the credit column of a business's trial balance

Identify the account below that is classified as an asset in a company's chart of accounts:

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

A company's ledger is:

A double-entry accounting system is an accounting system:

Identify the item below that would cause the trial balance to not balance?

Which of the following statements is not true:

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

You increase the Service Revenue account on the ________ side of its account.

Posting is the transfer of journal entry information to the ledger.

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

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