Question 1

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year:
$\begin{array}{llcc}
 & \text { Assets} &\text {  Liabilities  }\
 \text { Beginning of the year ............ } &\$114,000& \$68,000\
 \text { End of the year ......................} &135,000&73,000\
\end{array}$

If Jerry made no investments in the business but withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Accepted Answer

The answer of Jerry's Butcher Shop, Inc. had the following...

Question 2

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

Accepted Answer

A) True 
 B)False

Question 3

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Accepted Answer

A)  Debit to Unearned Management Fees for $60,000. 
B)  Credit to Management Fees Earned for $60,000. 
C)  Credit to Cash for $60,000. 
D)  Credit to Unearned Management Fees for $60,000. 
E)  Debit to Management Fees Earned for $60,000.

Question 4

Explain how accounts are used in recording information about a business's transactions.

Accepted Answer

The answer of Explain how accounts are used in recording...

Question 5

Debits increase asset and expense accounts.

Accepted Answer

A) True 
 B)False

Question 6

Geraldine Parker, the owner of Gi Gi's Dance Studio, Inc., started the business by investing $10,000 cash and donating a building worth $20,000. Identify the general journal entry below that Gi Gi's will make to record the transaction.

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 10,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | l | l | l | } 
\hline \text { Cormmen Stock } & 30,000 & \
\hline \text { Cash } & & 10,000 \
\hline \text { Building } & & 20,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 10,000 & \
\hline \text { Building } & 20,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Common Stock } & 30,000 & \
\hline \text { Retained Earnings } & & 30,000 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Cash \& Building } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$

Question 7

Identify the statement that is incorrect.

Accepted Answer

A)  Higher financial leverage involves higher risk. 
B)  Risk is higher if a company has more liabilities. 
C)  Risk is higher if a company has higher assets. 
D)  The debt ratio is one measure of financial risk. 
E)  Lower financial leverage involves lower risk.

Question 8

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances

Accepted Answer

A) True 
 B)False

Question 9

Using the following list of accounts and identification letters A through J for Homer's Management Co., Inc., enter the type of account and its normal balance into the table below. The first item is filled in as an example:

Accepted Answer

The answer of Using the following list of accounts and...

Question 10

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

Accepted Answer

A) True 
 B)False

Question 11

A debit entry is always an increase in the account.

Accepted Answer

A) True 
 B)False

Question 12

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?

Accepted Answer

A)  $83,900. 
B)  $91,900. 
C)  $6,600. 
D)  $75,900. 
E)  $4,900.

Question 13

_____________ and ______________ are the starting points for the analyzing and recording process.

Accepted Answer

The answer of _____________ and ______________ are the starting points...

Question 14

The business paid $100 cash dividend to Charles Nice (the sole stockholder of the corporation). Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of The business paid $100 cash dividend to...

Question 15

Identify the account below that impacts the Equity of a business:

Accepted Answer

A)  Utilities Expense 
B)  Accounts Payable 
C)  Accounts Receivable 
D)  Cash 
E)  Unearned Revenue

Question 16

A debit is used to record which of the following:

Accepted Answer

A)  A decrease in an asset account. 
B)  A decrease in an expense account. 
C)  An increase in a revenue account. 
D)  An increase in a contributed capital account. 
E)  An increase in the dividends account.

Question 17

The balances for the accounts of Milo's Management Co., Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. $\begin{array}{c}
\begin{array}{lr}
\text { Accounts payable..... } & \$ 6,500 \
\text { Accounts receivable... } & 7,000 \
\text { Cash ............... } & \text { ? } \
\text { Office supplies. } & 1,200 \
\text { Building ........... } & 125,000 \
\text { Supplies expense..... } & 21,500 \
\text { Common stock ........ } & 118,700 \
\text { Management revenue. } & 175,000 
\end{array}
\begin{array}{lr}
 \text { Wages expense}&36,000\
 \text { Rent expense}&6,000\
\
\

\text { Land}&50,000\
 \text { Unearned management}\
 \text {  fees}&4,000\
 \text { Dividends}&48,000
\end{array}
\end{array}$
 Calculate the correct balance for Cash and prepare a trial balance.

Accepted Answer

The answer of The balances for the accounts of Milo's...

Question 18

Match between columns
                        Premises: Cash
Prepaid Insurance
Office Furnitur
Accounts Payable
Accounts Receivable
Salary Expense
Dividends
Fees Revenue
Equipment
Common Stock
Supplies
Unearned Revenue

Accepted Answer

The Answer of equity and liability and revenue and asset is...

Question 19

Explain the recording and posting processes.

Accepted Answer

The answer of Explain the recording and posting processes....

Question 20

At the end of its first month of operations, Michael's Consulting Services, Inc. reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The stockholders' total investment for this first month was $5,000.
Calculate the ending balance in Stockholders' Equity to be reported on the Balance Sheet.

Accepted Answer

A)  $30,000 
B)  $25,000 
C)  $20,000 
D)  $ 5,000 
E)  $ 7,000

Exam 2: Analyzing for Business Transactions

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Explain how accounts are used in recording information about a business's transactions.

Debits increase asset and expense accounts.

Geraldine Parker, the owner of Gi Gi's Dance Studio, Inc., started the business by investing $10,000 cash and donating a building worth $20,000. Identify the general journal entry below that Gi Gi's will make to record the transaction.

Identify the statement that is incorrect.

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances

Using the following list of accounts and identification letters A through J for Homer's Management Co., Inc., enter the type of account and its normal balance into the table below. The first item is filled in as an example:

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

A debit entry is always an increase in the account.

_ and __ are the starting points for the analyzing and recording process.

The business paid $100 cash dividend to Charles Nice (the sole stockholder of the corporation). Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Identify the account below that impacts the Equity of a business:

A debit is used to record which of the following:

Identify each of the following accounts

Explain the recording and posting processes.