Question 1

The chronological record of each complete transaction that has occurred is called the:

Accepted Answer

A)  Account balance. 
B)  Ledger. 
C)  Journal. 
D)  Trial balance. 
E)  Cash account.

Question 2

A dividend normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 3

Debit means increase and credit means decrease for all accounts.

Accepted Answer

A) True 
 B)False

Question 4

Pippa's Paralegal Services, Inc. completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for paralegal services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.

Accepted Answer

The answer of Pippa's Paralegal Services, Inc. completed these transactions...

Question 5

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Accepted Answer

A) True 
 B)False

Question 6

Wiley Hill opened Hill's Repairs, Inc. on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books:
1) Wiley invested $25,000 cash in the corporation.
2) Wiley contributed $100,000 of equipment to the corporation.
3) The company paid $2,000 cash to rent office space for the month.
4) The company received $16,000 cash for repair services provided during March.
5) The company paid $6,200 for salaries for the month.
6) The company provided $3,000 of services to customers on account.
7) The company paid cash of $500 for monthly utilities.
8) The company received $3,100 cash in advance of providing repair services to a customer.
9) The company paid $5,000 cash in dividends to Wiley. (sole shareholder)
Based on this information, the balance in Stockholders' Equity reported on the Balance Sheet at the end of March would be:

Accepted Answer

A)  $133,400. 
B)  $130,300 
C)  $125,300 
D)  $8,400 
E)  $13,500.

Question 7

Mary Sunny began business as Sunny Law Firm, Inc. on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30.
a) Mary invested $15,000 cash and a law library valued at $6,000.
b) Purchased $7,500 of office equipment from John Bronx on credit.
c) Completed legal work for a client and received $1,500 cash in full payment.
d) Paid John Bronx. $3,500 cash in partial settlement of the amount owed.
e) Completed $4,000 of legal work for a client on credit.
f) The company paid $2,000 cash in dividends to the owner. (sole shareholder)
g) Received $2,500 cash as partial payment for the legal work completed for the client in (e).
h) Paid $2,500 cash for the legal secretary's salary.

Accepted Answer

The answer of Mary Sunny began business as Sunny Law...

Question 8

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

Accepted Answer

A)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable. 
C)  A $50 cash receipt for the performance of a service was not recorded at all. 
D)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

Question 9

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the ______________.

Accepted Answer

The answer of The second step in the analyzing and...

Question 10

Miley Block, Inc. is a building consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Block. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

Accepted Answer

The answer of Miley Block, Inc. is a building consultant....

Question 11

Joel Consulting received $3,000 from a customer for services provided. Joel's general journal entry to record this transaction will be:

Accepted Answer

A)  Debit Services Revenue, credit Accounts Receivable. 
B)  Debit Cash, credit Accounts Payable. 
C)  Debit Cash, credit Accounts Receivable. 
D)  Debit Cash, credit Services Revenue. 
E)  Debit Accounts Payable, credit Services Revenue.

Question 12

At year-end, a trial balance showed total credits exceed total debits by $4,950. This difference could have been caused by:

Accepted Answer

A)  An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash. 
B)  A net income of $4,950. 
C)  The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950. 
D)  The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550. 
E)  An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable.

Question 13

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 $$\begin{array} { | l | l | l | l | } 
\hline & & \text { Yes } & \text { No } \
\hline \text { Ex. } & \text { Credit card } & & \mathbf { X } \
\hline \text { a. } & \text { Credit card receipt } & & \
\hline \text { b. } & \text { Purchase order } & & \
\hline \text { c. } & \text { Invoice } & & \
\hline \text { d. } & \text { Balance sheet } & & \
\hline \text { e. } & \text { Bank statement } & & \
\hline \text { f. } & \text { Journal entry } & & \
\hline \text { g. } & \text { Telephone bill } & & \
\hline \text { h. } & \text { Employee earnings record } & & \
\hline
\end{array}$$

Accepted Answer

The answer of Identify by marking an X in the...

Question 14

Identify the correct formula below used to calculate the debt ratio.

Accepted Answer

A)  Total Equity/Total Liabilities. 
B)  Total Liabilities/Total Equity. 
C)  Total Liabilities/Total Assets. 
D)  Total Assets/Total Liabilities. 
E)  Total Equity/Total Assets.

Question 15

Identify the account below that is classified as a liability account:

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Salaries Expense 
D)  Common Stock 
E)  Equipment

Question 16

Joe Jackson opened Jackson's Repairs, Inc. on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books:
1) Jackson invested $25,000 cash in the business.
2) Jackson contributed $100,000 of equipment to the corporation.
3) The company paid $2,000 cash to rent office space for the month.
4) The company received $16,000 cash for repair services provided during March.
5) The company paid $6,200 for salaries for the month.
6) The company provided $3,000 of services to customers on account.
7) The company paid cash of $500 for monthly utilities.
8) The company received $3,100 cash in advance of providing repair services to a customer.
Based on this information, net income for March would be:

Accepted Answer

A)  $10,300. 
B)  $13,400 
C)  $5,300 
D)  $8,400 
E)  $13,500.

Question 17

Identify the statement below that is incorrect.

Accepted Answer

A)  The normal balance of accounts receivable is a debit. 
B)  The normal balance of dividends is a debit. 
C)  The normal balance of unearned revenues is a credit. 
D)  The normal balance of an expense account is a credit. 
E)  The normal balance of the common stock account is a credit.

Question 18

A business's general journal provides a place for recording all of the following except:

Accepted Answer

A)  The transaction date. 
B)  The names of the accounts involved. 
C)  The amount of each debit and credit. 
D)  An explanation of the transaction. 
E)  The balance in each account.

Question 19

At year-end, Henry Laundry Service, Inc. noted the following errors in its trial balance:
1. It understated the total debits to the Cash account by $500 when computing the account balance.
2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting debit was not posted.
3. A cash payment to a creditor for $2,600 was never recorded.
4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the trial balance.
5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment and a $24,090 credit to Notes Payable.
6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The offsetting credit entry was correct.
7. An additional investment of $4,000 by Del Henry was recorded as a debit to Common Stock and as a credit to Cash.
8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice.
9. The revenue account balance of $79,817 was listed on the trial balance as $97,817.
10. A $1,000 cash withdrawal by the stockholder was recorded as a $100 debit to Dividends and $100 credit to cash.
Using the form below, indicate whether each error would cause the trial balance to be out of balance, the amount of any imbalance, and whether a correcting journal entry is required.

Accepted Answer

The answer of At year-end, Henry Laundry Service, Inc. noted...

Question 20

Dividends are not reported on a business's income statement.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing for Business Transactions

The chronological record of each complete transaction that has occurred is called the:

A dividend normally has a debit balance.

Debit means increase and credit means decrease for all accounts.

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

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

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the ______________.

Joel Consulting received $3,000 from a customer for services provided. Joel's general journal entry to record this transaction will be:

At year-end, a trial balance showed total credits exceed total debits by $4,950. This difference could have been caused by:

Identify the correct formula below used to calculate the debt ratio.

Identify the account below that is classified as a liability account:

Identify the statement below that is incorrect.

A business's general journal provides a place for recording all of the following except:

Dividends are not reported on a business's income statement.