Question 1

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 2

If common stock account had a $10,000 credit balance at the beginning of the period, and during the period, the stockholders invest an additional $5,000, the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.
$10,000cr + $5,000cr = $15,000 credit balance

Accepted Answer

A) True 
 B)False

Question 3

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

Accepted Answer

A) True 
 B)False

Question 4

All of the following statements accurately describe the debt ratio except:

Accepted Answer

A) It is of use to both internal and external users of accounting information. 
B) A relatively high ratio is always desirable. 
C) The dividing line for a high and low ratio varies from industry to industry. 
D) Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt. 
A) It is of use to both internal and external users of accounting information. 
B) A relatively high ratio is always desirable. 
C) The dividing line for a high and low ratio varies from industry to industry. 
D) Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Question 5

Lu Lu's Catering has a debt ratio equal to 0.3 and its competitor, Able's Bakery, has a debt ratio equal to 0.7. Determine the statement below that is correct.

Accepted Answer

A) Able's Bakery has a smaller percentage of its assets financed with liabilities as compared to Lu Lu's. 
B) Able's Bakery's financial leverage is less than Lu Lu's. 
C) Able's Bakery's financial leverage is greater than Lu Lu's. 
D) Lu Lu's has a higher risk from its financial leverage. 
E) Higher financial leverage involves lower risk. 
A) Able's Bakery has a smaller percentage of its assets financed with liabilities as compared to Lu Lu's. 
B) Able's Bakery's financial leverage is less than Lu Lu's. 
C) Able's Bakery's financial leverage is greater than Lu Lu's. 
D) Lu Lu's has a higher risk from its financial leverage. 
E) Higher financial leverage involves lower risk.

Question 6

If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

Accepted Answer

A) True 
 B)False

Question 7

After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window Company, Inc. discovered the following errors:
1. Cash payment of the $225 telephone bill for December was recorded twice.
2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000.
3. A $900 cash dividend paid to the owner was recorded to the correct accounts as $90.
4. An additional investment of $5,000 cash by the owner was recorded as a debit to Common Stock and a credit to Cash.
5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry.
Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column. Would the error cause the trial balance to be out of balance?

Accepted Answer

The answer of After preparing an (unadjusted) trial balance at...

Question 8

The steps in the accounting process focus on analyzing and recording financial transactions and events within a company. Those steps are shown below. Using the number system of 1 as the first step and 4 as the last step in the process, number the steps in the correct order in which they would occur (1 thru 4).
_____ Record relevant transactions and events in a journal
_____ Post journal information to the ledger accounts
_____ Prepare and analyze the trial balance
_____ Analyzing each transaction

Accepted Answer

___2__ Record relevant transac

Question 9

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

Accepted Answer

A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal. 
A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal.

Question 10

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 11

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?

Accepted Answer

A) Debit Assets $200,000; credit Common Stock, $200,000. 
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000. 
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000. 
D) Debit Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000. 
E) Debit Common Stock, $200,000; credit Assets, $200,000. 
A) Debit Assets $200,000; credit Common Stock, $200,000. 
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000. 
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000. 
D) Debit Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000. 
E) Debit Common Stock, $200,000; credit Assets, $200,000.

Question 12

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address).

Accepted Answer

A) True 
 B)False

Question 13

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 14

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under or overstated as a result of this error?

Accepted Answer

A) Supplies, understated $130; Fees Earned, overstated $130. 
B) Supplies, understated $260; Fees Earned, overstated $130. 
C) Supplies, overstated $130; Fees Earned, overstated $130. 
D) Supplies, overstated $130; Fees Earned, understated $130. 
E) Supplies, overstated $260; Fees Earned, understated $130. 
A) Supplies, understated $130; Fees Earned, overstated $130. 
B) Supplies, understated $260; Fees Earned, overstated $130. 
C) Supplies, overstated $130; Fees Earned, overstated $130. 
D) Supplies, overstated $130; Fees Earned, understated $130. 
E) Supplies, overstated $260; Fees Earned, understated $130.

Question 15

The accountant for a new company is establishing the chart of accounts for the company based on the accounts he expects to be used. He has decided to use a three digit account number with each account type starting with a different number. Which of the following numbers would you expect the Asset range to begin with?

Accepted Answer

A) 900 
B) 700 
C) 300 
D) 200 
E) 100 
A) 900 
B) 700 
C) 300 
D) 200 
E) 100

Question 16

You decrease the Accounts Payable account on the ___________ side of its account.

Accepted Answer

The answer of You decrease the Accounts Payable account on...

Question 17

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Accepted Answer

A) Debit to Accounts Payable. 
B) Debit to Accounts Receivable. 
C) Credit to Cash. 
D) Credit to Accounts Payable. 
E) Credit to Common Stock. 
A) Debit to Accounts Payable. 
B) Debit to Accounts Receivable. 
C) Credit to Cash. 
D) Credit to Accounts Payable. 
E) Credit to Common Stock.

Question 18

Explain the recording and posting processes.

Accepted Answer

Information from business transactions a

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

Accepted Answer

A) True 
 B)False

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

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

All of the following statements accurately describe the debt ratio except:

Lu Lu's Catering has a debt ratio equal to 0.3 and its competitor, Able's Bakery, has a debt ratio equal to 0.7. Determine the statement below that is correct.

If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called 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.

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address).

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under or overstated as a result of this error?

You decrease the Accounts Payable account on the ___________ side of its account.

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Explain the recording and posting processes.

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

A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 2: Accounting System and Financial Statements

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

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

All of the following statements accurately describe the debt ratio except:

Lu Lu's Catering has a debt ratio equal to 0.3 and its competitor, Able's Bakery, has a debt ratio equal to 0.7. Determine the statement below that is correct.

If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called 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.

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address).

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under or overstated as a result of this error?

You decrease the Accounts Payable account on the ___________ side of its account.

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Explain the recording and posting processes.

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

A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

Introducing Financial Accounting

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Term Assets

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters