Exam 2: Accounting System and Financial Statements

ABC Catering received $800 cash from a customer for catering services to be provided in the following month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

The debt ratio is used:

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:

Based on the following trial balance for Barry's Automotive Shop, Inc., prepare an income statement, statement of retained earnings, and a balance sheet. Barry made no additional investments in the company during the year.

Explain debits and credits and their role in the accounting system of a business.

Select the account below that normally has a credit balance.

A company's ledger is:

If Taylor Willow, the owner of Willow Hardware Inc., uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

Prepaid expenses are generally:

The balance sheet reports the financial position of a company at a point in time.

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

An asset created by prepayment of an insurance expense is:

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

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year: If Jerry made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Unearned revenues are generally:

What is a trial balance? What is its purpose?

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

Explain the debt ratio and its use in analyzing a company's financial condition.

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?