Question 1

Credits always increase account balances.

Accepted Answer

A) True 
 B)False

Question 2

Preparation of a trial balance is the first step in processing a financial transaction.

Accepted Answer

A) True 
 B)False

Question 3

The following transactions occurred during July:
1) Received $900 cash for services provided to a customer during July.
2) Received $2,200 cash investment from Bob Johnson, the stockholder of the business.
3) Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4) Provided services to a customer on credit, $375.
5) Borrowed $6,000 from the bank by signing a promissory note.
6) Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A)  $ 900. 
B)  $ 1,275. 
C)  $ 2,525. 
D)  $ 3,275. 
E)  $11,100.

Question 4

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

Accepted Answer

A)  Record relevant transactions and events in a journal 
B)  Post journal information to the ledger accounts 
C)  Prepare and analyze the trial balance. 
D)  Analyzing each transaction 
E)  Verify that revenues and expenses are equal.

Question 5

A debit is used to record an increase in all of the following accounts except:

Accepted Answer

A)  Supplies 
B)  Cash 
C)  Accounts Payable 
D)  Dividends 
E)  Prepaid Insurance

Question 6

The record of all accounts and their balances used by a business is called a:

Accepted Answer

A)  Journal. 
B)  Book of original entry. 
C)  General Journal. 
D)  Balance column journal. 
E)  Ledger.

Question 7

A credit is used to record an increase in all of the following accounts except:

Accepted Answer

A)  Accounts Payable 
B)  Service Revenue 
C)  Unearned Revenue 
D)  Wages Expense 
E)  Common Stock

Question 8

Jason Hope decided to open a hotel, set up as a corporation, in his hometown. Prepare journal entries to record the following transactions. Hope uses the accounts Room Rental Revenue and Event Revenue. All expenses for special events are recorded as Event Expense.

Accepted Answer

The answer of Jason Hope decided to open a hotel,...

Question 9

A debit:

Accepted Answer

A)  Always increases an account. 
B)  Is the right-hand side of a T-account. 
C)  Always decreases an account. 
D)  Is the left-hand side of a T-account. 
E)  Is not need to record a transaction.

Question 10

Figgaro Company Inc.'s accounts and their balances, as of the end of August, are included below. All accounts have normal balances: $\begin{array}{c}
\begin{array}{lc}
\text { Accounts receiv able..... } & \$ 36,000 \
& \
\text { Equipment............ } & 59,000 \
\text { Service revenues earned. } & 75,000 \
\text { Rent exp ense ........... } & 3,600 \
\text { Office supplies......... } & 1,500 \
\text { Notes payable......... } & 22,000 
\end{array}
\begin{array}{cr} \text { Cash ................. } & \$ 28,000 \
\text { Common stock } & 1,000 \
\text { Advertising expense ...... } & 5,000 \
\text { Accounts payable........ } & 31,000 \
\text { Dividends.. } & 24,000 \
\text { Salaries expense......... } & 30,000 \
\text { Retained earnings....... } & 58,100 
\end{array}
\end{array}$
 a. Calculate net income.
b. Determine the amount of retained earnings to be shown on the August 31 balance sheet.

Accepted Answer

The answer of Figgaro Company Inc.'s accounts and their balances,...

Question 11

A business's source documents:

Accepted Answer

A)  include the ledger. 
B)  Provide objective evidence that a transaction has taken place. 
C)  must be in electronic form. 
D)  are prepared internally to ensure accuracy. 
E)  include the chart of accounts.

Question 12

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Accepted Answer

A)  Debit to Accounts Payable. 
B)  Debit to Accounts Receivable. 
C)  Credit to Cash. 
D)  Credit to Accounts Payable. 
E)  Credit to Common Stock.

Question 13

Rowdy Bolton began Bolton Office Services, Inc. in October and during that month completed these transactions:
a. Invested $10,000 cash, and $15,000 of computer equipment.
b. Paid $500 cash for an insurance premium covering the next 12 months.
c. Completed a word processing assignment for a customer and collected $1,000 cash.
d. Paid $200 cash for office supplies.
e. Paid $2,000 for October's rent.
Prepare journal entries to record the above transactions. Explanations are unnecessary.

Accepted Answer

The answer of Rowdy Bolton began Bolton Office Services, Inc....

Question 14

The _____________________ is found by determining the difference between total debits and total credits for an account, including any beginning balance

Accepted Answer

The answer of The _____________________ is found by determining the...

Question 15

ABC Company made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of ABC Company made a $2,500 payment on...

Question 16

Identify the statement below that is true.

Accepted Answer

A)  If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions. 
B)  The trial balance is a book of original entry. 
C)  Another name for the trial balance is the chart of accounts. 
D)  The trial balance is a list of all accounts from the ledger with their balances at a point in time. 
E)  The trial balance is another name for the balance sheet as long as debits balance with credits.

Question 17

Match between columns
                        Premises: Accounts Payable
Fees Revenue
Rent Expense
Unearned Fees Revenues
Rent Expense
Notes Receivable
Wages Payable
Office Equipment
Cash
Common Stock

Accepted Answer

The Answer of Income Statementor and Balance Sheet is...

Question 18

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Unearned Catering Revenue } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Accounts Receivable } & & \mathbf { 8 0 0 } \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Unearned Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$

Question 19

An account used to record the stockholders' investments in a business is called a(n):

Accepted Answer

A)  Dividends account. 
B)  Common stock account. 
C)  Revenue account. 
D)  Expense account. 
E)  Liability account.

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing for Business Transactions

Credits always increase account balances.

Preparation of a trial balance is the first step in processing a financial transaction.

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

A debit is used to record an increase in all of the following accounts except:

The record of all accounts and their balances used by a business is called a:

A credit is used to record an increase in all of the following accounts except:

Jason Hope decided to open a hotel, set up as a corporation, in his hometown. Prepare journal entries to record the following transactions. Hope uses the accounts Room Rental Revenue and Event Revenue. All expenses for special events are recorded as Event Expense.

A debit:

A business's source documents:

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

The _____________________ is found by determining the difference between total debits and total credits for an account, including any beginning balance

ABC Company made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Identify the statement below that is true.

The following accounts appear on either the Income Statementor Balance Sheet.

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

An account used to record the stockholders' investments in a business is called a(n) :

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