Exam 16: Accounting for Business Transactions

Specter Consulting purchased $7,000 of supplies and paid cash immediately. Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

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

After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window Company 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 was recorded to the correct accounts as $90. 4. An additional investment of $5,000 cash by a stockholder 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. Error Yes No 1 2 3 4 5

On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

The balance column in a ledger account is:

Cash dividends paid to stockholders are not reported on the income statement.

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). _____ Analyze transactions using the accounting equation. _____ Record journal entry. _____ Post entry to ledger. _____ Identify transactions and source documents.

Smart Consulting, paid cash dividends of $2,000 to its common stockholders. Identify the general journal entry below that Smart Consulting will make to record the transaction.

Identify the statement that is incorrect.

Source documents identify and describe transactions and events entering the accounting process.

The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits.

Assets would be increased with a ________ entry and liabilities would be increased with a________ entry.

The balances for the accounts of Milo's Management Co. for the year ended December 31 are shown below. Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?

A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

All of the following are asset accounts except:

Identify the account below that is classified as a liability account:

Jerry's Shop had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year \ 114,000 \ 68,000 End of the year 135,000 73,000 If there were no stockholder investments or dividends paid during the year, what was the amount of net income earned by Jerry's Shop?

The debt ratio is calculated by dividing total assets by total liabilities.