Exam 16: Accounting for Business Transactions

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

The posting process is the link between the ________ and the ________.

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

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the ________.

NBC made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Jarrod Automotive, owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow:

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

The right side of an account is called the debit side.

What is a trial balance? What is its purpose?

Prepaid accounts (also called prepaid expenses) are generally:

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 Common Stock f. To decrease Notes Payable g. To increase Prepaid Rent h. To increase Salaries Expense i. To increase Accounts Payable j. To decrease Prepaid Insurance

What are the three groups of accounts shown on an unclassified balance sheet and define each group?

Jose Consulting paid $500 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.

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

The purchase of land and buildings will generally be recorded in the same ledger account.

Describe what source documents are and the purpose they serve in a business.

Increases in liability accounts are recorded as debits.

Preparation of a trial balance is the first step in processing a financial transaction.