Exam 16: Accounting for Business Transactions

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

Unearned revenue is classified as a(an) ________ on a business's balance sheet.

Drew Castle is an insurance appraiser. Shown below are (a) several accounts in his ledger with each account preceded by an identification number, and (b) several transactions completed by Castle. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction. 1. Accounts Payable 8. Office Supplies Expense 2. Accounts Receivable 9. Prepaid Insurance 3. Appraisal Fees Earned 10. Salaries Expense 4. Cash 11. Telephone Expense 5. Insurance Expense 12. Unearned Appraisal Fees 6. Office Equipment 13. Common Stock 7. Office Supplies 14. Dividends

A credit:

Dividends always decrease equity.

Edison Consulting received a $300 utilities bill and immediately paid it. Edison's general journal entry to record this transaction will include a:

Indicate whether a debit or credit entry would be required to record the following changes in each account. a. To decrease Cash b. To increase Common Stock c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Dividends.

A business's source documents may include all of the following except:

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

Sanders Co. has total assets of $385 million. Its total liabilities are $100.1 million and its equity is $284.9 million. Calculate its debt ratio.

If a company provides services to a customer on credit, the company providing the service should credit Accounts Receivable.

The accounting process begins with:

If Tyrol Willow, the sole stockholder of Willow Hardware, withdraws cash of the business to purchase a family car, the business should record this use of cash with an entry to:

Identify the item below that would cause the trial balance to not balance?

Archer Co. 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 $12,000 of common stock was issued during the year, and the business paid $5,000 in dividends during the year, what was the amount of net income earned by Archer Co.?

At the end of the current year, James Co. reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio was:

A customer's promise to pay on credit is classified as an account payable by the seller.

At the beginning of the current year, Snell Co. total assets were $248,000 and its total liabilities were $174,200. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in equity during the year and total assets at the end of the year were $260,000. The company's debt ratio at the end of the current year is:

Debit means increase and credit means decrease for all accounts.