Exam 3: The Double-Entry Accounting System

Generally accepted accounting principles require that a business's fiscal year must end on December 31.

Ferris Company prepared a trial balance at December 31, 2013. A trial balance that balances

Indicate whether each of the following statements is true or false. If a company made the following journal entry, this entry would cause: _____ a) total claims to stay the same. _____ b) total assets to remain the same. _____ c) liabilities to decrease. _____ d) cash flows from operating activities to increase. _____ e) owners' equity to decrease.

Which of the following is decreased with a debit?

To record an asset source transaction, an asset account would be credited and a liability or equity debited.

Record the adjusting journal entries that should be made for Gates Company at December 31, 2013. 1) Recognized $3,500 of salaries expense for the last several days of December. 2) Earlier in the period $800 of supplies were purchased. As of December 31, 2011, the company had $220 of the supplies still on hand. 3) On October 1, a customer had made an advance payment of $32,000 for services to be rendered over a 6-month period beginning October 1.

Jasper Company experienced an accounting event that was recorded in the company's general journal: Which of the following choices accurately reflects how this event affects the company's financial statements?

The following account balances prior to closing entries were taken from the records of Keswick Company: After closing entries at December 31, 2013, Retained Earnings will be:

What statement is true regarding the trial balance?

Below are listed several transactions of Patricia Company during 2013. 1. Provided services to customers for cash, $35,000 2. Purchased land by paying cash, $16,000 3. Paid rent for 6 months, $12,000 4. Acquired cash of $25,000 by issuing common stock 5. Purchased office supplies on account, $2,700 6. Receive payment of $6,000 from a customer for services that will be provided over the next six months Required: a) Prepare journal entries for each of the preceding transactions, using the general journal below. b) Show how each transaction affects the financial statements model. Include dollar amounts of increases and decreases; indicate NA for not affected. In the Cash Flow column, use the letters OA for operating activities, IA for investing activities, and FA for financing activities.

On November 1, 2013, Schumacher Company paid $1,200 in advance for an insurance policy that covered the company for six months. Assuming that Schumacher recorded this purchase as an asset, the adjusting entry required on December 31, 2013 would include:

The following is a trial balance of Barnhart Company as December 31, 2013: Based on the trial balance, the total amount of assets appearing on the balance sheet would be:

Haskins Company recorded a business event in these T-accounts: Which of the following choices accurately reflects how this event would affect the company's financial statements?

The following adjusted trial balance is for Warren Company as of December 31, 2013. Using this information, prepare Warren's 2013 closing entries, income statement, and balance sheet.

Which of the following is increased with a credit?

Pena Corporation recorded a business event using T-accounts as follows: Which of the following reflects how this event affects the company's financial statements?

Double entry accounting requires that every entry must include at least one debit and at least one credit.

The return on equity ratio for Garber is:

The following is a list of all accounts and balances for the Jax Corporation immediately prior to closing the books on December 31, 2013. Required: Prepare an adjusted trial balance in proper form for the Jax Corporation dated December 31, 2013.

What is financial leverage? What financial ratio can be increased by using financial leverage?