Exam 3: The Accounting Cycle: Capturing Economic Events

Recording transactions journal entry grid A list of accounts for Harding Company is given below,followed by a series of transactions.Indicate the accounts that would be debited and credited in recording each transaction by placing the appropriate number (or numbers)in the space provided.

A credit to a ledger account refers to the entry of an amount on the right side of an account.

Which of the following is not true regarding the general ledger account for Cash?

Sue Costa,owner of A-1 Cleaning Services,invested an additional $75,000 in the company.Which of the following would be a part of the correct journal entry to record this transaction?

Increases in owners' equity are recorded by credits;increases in assets and in liabilities are recorded by debits.

Which of the following accounts normally has a debit balance?

Clinton prepares monthly financial statements.Which of the following violates the matching principle?

Accounting terminology Listed below are nine technical accounting terms introduced in this chapter: For each question part A through G,choose a term from the table above that best matches. (A. )The accounting record in which transactions are initially recorded. (B. )A concept designed to avoid overstatement of the financial strength of a company. (C. )A schedule prepared to determine the equality of the debit and credit amounts in the ledger. (D. )An amount entered in the right side of a ledger account. (E. )The sequence of procedures involved in recording transactions,processing the information in the accounting system,and summarizing the information in the form of financial statements. (F. )The accounting record that contains a separate account for each type of asset and liability,and for each element of owners' equity appearing in the balance sheet. (G. )The system of accounting in which every business transaction is recorded by equal dollar amounts of debit and credit entries.

[The following information applies to the questions displayed below.] Wilson Trucking,Inc.reports these account balances at January 1,2018 (shown in alphabetical order): On January 5,Wilson Trucking collected $175,000 of its accounts receivable,paid $150,000 on its accounts payable,and paid $11,000 on its note payable. -In a trial balance prepared on January 6,2018,the total of the credit column is:

Dividends are an expense to a corporation and appear on the income statement.

[The following information applies to the questions displayed below.] The following transactions occurred during March,the first month of operations for Quality Galleries,Inc.: * Capital stock was issued in exchange for $360,000 cash. * Purchased $180,000 of equipment by making a $60,000 cash down payment and signing a note payable for the balance. * Made a $35,000 cash payment on the note payable from the purchase of equipment. * Sold a piece of equipment for cash of $18,000.The equipment was sold at cost,so there is no gain or loss on the sale. -What are total assets of Quality Galleries at the end of March?

The term revenue can best be described as:

A trial balance that balances provides proof that all transactions were correctly journalized and posted to the ledger.

All of the following statements are true of an income statement except:

Posting is the process of:

Rules of debit and credit as applied to balance sheet accounts Items in the balance sheet are classified into three categories: assets,liabilities,and owners' equity. (A. )Identify by name two ledger accounts in each of the first two categories above (assets and liabilities)and one owners' equity account.State whether each account would normally have a debit or credit balance. (B. )Describe briefly the rules of debits and credits as applied to the three categories of balance sheet accounts: asset accounts,liability accounts,and owners' equity accounts.

In a ledger,debit entries cause:

Recognizing revenue when it is earned and not when cash is received and recognizing expenses when the related goods or services are used rather than when they are paid for is called:

Which of the following is not a step in the accounting cycle?

In accounting,the terms debit and credit indicate,respectively: