Exam 2: Accounting System and Financial Statements

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account.

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

To increase an asset account we would _______________ it and to increase a liability account, we would ______________ it.

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

A business's general journal provides a place for recording all of the following except:

Mary Sunny began business as Sunny Law Firm, Inc. on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then prepare a trial balance, as of November 30. a) Mary invested $15,000 cash and a law library valued at $6,000. b) Purchased $7,500 of office equipment from John Bronx on credit. c) Completed legal work for a client and received $1,500 cash in full payment. d) Paid John Bronx. $3,500 cash in partial settlement of the amount owed. e) Completed $4,000 of legal work for a client on credit. f) The company paid $2,000 cash in dividends to the owner. (sole shareholder) g) Received $2,500 cash as partial payment for the legal work completed for the client in (e). h) Paid $2,500 cash for the legal secretary's salary.

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

An account balance is:

The financial statement that summarizes the changes in retained earnings is called the balance sheet.

During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

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:

A debit is used to record an increase in all of the following accounts except:

A credit entry:

At the end of its first month of operations, Michael's Consulting Services, Inc. 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 stockholders' total investment for this first month was $5,000. Calculate the ending balance in Stockholders' Equity to be reported on the Balance Sheet.

Gi Gi's Bakery has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Larry Bar opened a frame shop and completed these transactions: 1. Larry started the shop by investing $40,000 cash and equipment valued at $18,000. 2) Purchased $70 of office supplies on credit. 3) Paid $1,200 cash for the receptionist's salary. 4) Sold a custom frame service and collected $1,500 cash on the sale. 5) Completed framing services and billed the client $200. What was the balance of the cash account after these transactions were posted?

A credit is used to record an increase in all of the following accounts except:

Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea, the stockholder, invested $13,500 cash in the business. 2) Andrea contributed $20,000 of photography equipment to the business. 3) The company paid $2,100 cash for an insurance policy covering the next 24 months. 4) The company received $5,700 cash for services provided during January. 5) The company purchased $6,200 of office equipment on credit. 6) The company provided $2,750 of services to customers on account. 7) The company paid cash of $1,500 for monthly rent. 8) The company paid $3,100 on the office equipment purchased in transaction #5 above. 9) Paid $275 cash for January utilities. Based on this information, the balance in the cash account at the end of January would be:

For each of the following accounts, identify whether a debit or credit yields the indicated change.

Jay's Limo Services, Inc. paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?