Exam 3: The Accounting Cycle: Capturing Economic Events

Double-entry accounting is characterized by which of the following?

If the trial balance has a smaller debit balance than credit balance, it signifies:

A journal entry to record revenue could include each of the following, except:

Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts.

Master Equipment has a $17,400 liability to Arrow Paint Co. When Master Equipment makes a partial payment of $7,600 on this liability, which of following is true about the journal entry made by Master to record this transaction?

A trial balance that is out of balance indicates that:

Transactions are recorded in the general journal in:

Recording transactions in T accounts; trial balance On May 15, George Manny began a new business, called Sounds, Inc., a recording studio to be rented out to artists on an hourly or daily basis. The following six transactions were completed by the business during May: (A.) Issued to Manny 5,000 shares of capital stock in exchange for his investment of $200,000 cash. (B.) Purchased land and a building for $410,000, paying $100,000 cash and signing a note payable for the balance. The land was considered to be worth $310,000 and the building $100,000. (C.) Installed special insulation and soundproofing throughout most of the building at a cost of $120,000. Paid $32,000 cash and agreed to pay the balance in 60 days. Manny considers these items to be additional costs of the building. (D.) Purchased office furnishings costing $18,000 and recording equipment costing $88,400 from Music Supplies. Sounds paid $28,000 cash with the balance due in 30 days. (E.) Borrowed $180,000 from a bank by signing a note payable. (F.) Paid the full amount of the liability to Music Supplies arising from the purchases in D above. Instructions (A.) Record the above transactions directly in the T accounts below. Identify each entry in a T account with the letter shown for the transaction. This exercise does not call for the use of a journal. (B.) Prepare a trial balance at May 31 by completing the form provided. SOUNDS, INC. Trial Balance May 31, 20__ Debit Credit

Recording transactions directly in T accounts; trial balance On July 20, Mollie Rose began a new business called MR Printing, which provides typing, duplicating, and printing services. The following six transactions were completed by the business during July. (A.) Issued to Rose 1,000 shares of capital stock in exchange for her investment of $200,000 cash. (B.) Purchased land and a small building for $450,000, paying $165,000 cash and signing a note payable for the balance. The land was considered to be worth $240,000 and the building $210,000. (C.) Purchased office equipment for $30,000 from Quality Interiors, Inc. Paid $17,000 cash and agreed to pay the balance within 60 days. (D.) Purchased a motorcycle on credit for $3,400 to be used for making deliveries to customers. Mollie agreed to make payment to Spokes, Inc. within 10 days. (E.) Paid in full the account payable to Spokes, Inc. (F.) Borrowed $30,000 from a bank and signed a note payable due in six months. Instructions (A.) Record the above transactions directly in the T accounts below. Identify each entry in a T account with the letter shown for the transaction. This exercise does not call for the use of a journal. (B.) Prepare a trial balance at July 31 by completing the form provided.

In a ledger, debit entries cause:

A trial balance proves that equal amounts of debits and credits were posted to the ledger.

The reason that revenue is recorded by a credit entry to a revenue account is:

Green Systems sold and delivered modems to Blue Computers for $660,000 to be paid by Blue in three equal installments over the next three months. The journal entry made by Blue Computers to record the last of the three installment payments will include:

If a company purchases equipment on account:

Enter the following transactions in the two-column journal provided for Charlie's Cabinetry. You may omit explanations. Mar. 2 Purchased auto cleaning supplies from Robert Suppliers for $750 on account. 4 Collected an account receivable of $525 from a customer, Elegant Kitchens. 5 Paid $275 in partial payment of an account payable to Lucy Co for equipment purchased in February. 7 Issued capital stock in exchange for $5,600 cash. 9 Purchased office equipment from Diamond's Warehouse for $3,700; paid $1,700 cash and issued a note payable due in 90 days for the balance. Date General Journal

On January 3, 2011, total liabilities are:

In a trial balance prepared at January 3, 2012, the total of the debit column is:

Which of the following accounting procedures requires the greatest knowledge of generally accepted accounting principles?

The realization principle indicates that revenue usually should be recognized and recorded in the accounting records:

What is the total owners' equity at the end of May?