Question 1

A company's list of accounts and the identification numbers assigned to each account is called a:

Accepted Answer

A)  Source document. 
B)  Journal. 
C)  Trial balance. 
D)  Chart of accounts. 
E)  General Journal.

Question 2

The accounting process begins with:

Accepted Answer

A)  Analysis of business transactions and source documents. 
B)  Preparing financial statements and other reports. 
C)  Summarizing the recorded effect of business transactions. 
D)  Presentation of financial information to decision-makers. 
E)  Preparation of the trial balance.

Question 3

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Accepted Answer

A) True 
 B)False

Question 4

A general journal is:

Accepted Answer

A)  A ledger in which amounts are posted from a balance column account. 
B)  Not required if T-accounts are used. 
C)  A complete record of all transactions in chronological order from which transaction amounts are posted to the ledger accounts. 
D)  Not necessary in electronic accounting systems. 
E)  A book of final entry because financial statements are prepared from it.

Question 5

In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.

Accepted Answer

A) True 
 B)False

Question 6

A company had total assets of $350,000, total liabilities of $101,500 and total equity of $248,500. Calculate the company's debt ratio.

Accepted Answer

The answer of A company had total assets of $350,000,...

Question 7

Identify the account below that is classified as a liability in a company's chart of accounts:

Accepted Answer

A)  Cash 
B)  Unearned Revenue 
C)  Salaries Expense 
D)  Accounts Receivable 
E)  Supplies

Question 8

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address)

Accepted Answer

A) True 
 B)False

Question 9

Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books:
1) Andrea, the stockholder, invested $13,500 cash in the business.
2) Andrea contributed $20,000 of photography equipment to the business.
3) The company paid $2,100 cash for an insurance policy covering the next 24 months.
4) The company received $5,700 cash for services provided during January.
5) The company purchased $6,200 of office equipment on credit.
6) The company provided $2,750 of services to customers on account.
7) The company paid cash of $1,500 for monthly rent.
8) The company paid $3,100 on the office equipment purchased in transaction #5 above.
9) Paid $275 cash for January utilities.
Based on this information, the balance in the cash account at the end of January would be:

Accepted Answer

A)  $41,450. 
B)  $12,225 
C)  $18,700. 
D)  $15,250. 
E)  $13,500.

Question 10

On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was:

Accepted Answer

A)  A decrease of $9,500. 
B)  An increase of $9,500. 
C)  An increase of $30,500. 
D)  A decrease of $30,500 
E)  An increase of 73,500.

Question 11

Indicate on which of the financial statements the following items appears. Use I for income statement, E for statement of retained earnings, and B for balance sheet. More than one statement may be appropriate for some items. $$\begin{array} { | l | l | } 
\hline \text { a. Fees Earned } &\quad\quad \
\hline \text { b. Cash } & \
\hline \text { c. Unearned Reverue } & \
\hline \text { d. Rent expense } & \
\hline \text { e. Retained Earnings } & \
\hline \text { f. Notes Payable } & \
\hline \text { g. Prepaid Rent } & \
\hline \text { 1. Salaries Expense } & \
\hline \text { i. Notes Payable } & \
\hline \text { j. Dividends } & \
\hline
\end{array}$$

Accepted Answer

The answer of Indicate on which of the financial statements...

Question 12

A journal entry that affects no more than two accounts is called a compound entry.

Accepted Answer

A) True 
 B)False

Question 13

All of the following statements accurately describe the debt ratio except.

Accepted Answer

A)  It is of use to both internal and external users of accounting information. 
B)  A relatively high ratio is always desirable. 
C)  The dividing line for a high and low ratio varies from industry to industry. 
D)  Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E)  The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Question 14

_______________ is the process of transferring journal entry information from the journal to the ledger.

Accepted Answer

The answer of _______________ is the process of transferring journal...

Question 15

Revenues and expenses are two categories of ____________________ accounts.

Accepted Answer

The answer of Revenues and expenses are two categories of...

Question 16

J. Brown Consulting paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 500 & \
\hline \text { Cash } & & 500 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 500 & \
\hline \text { Utilities Expense } & & 500 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Prepaid Utilities } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$

Question 17

When a company provides services for which cash will not be received until some future date, the company should record the amount charged as accounts receivable.

Accepted Answer

A) True 
 B)False

Question 18

The company paid $100 cash in dividends to J. Smith, the owner. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Comrnen Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$

Question 19

Asset accounts are normally decreased by debits.

Accepted Answer

A) True 
 B)False

Question 20

If common stock account had a $10,000 credit balance at the beginning of the period, and during the period, the stockholders invest an additional $5,000, the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing for Business Transactions

A company's list of accounts and the identification numbers assigned to each account is called a:

The accounting process begins with:

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

A general journal is:

In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.

A company had total assets of $350,000, total liabilities of $101,500 and total equity of $248,500. Calculate the company's debt ratio.

Identify the account below that is classified as a liability in a company's chart of accounts:

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address)

A journal entry that affects no more than two accounts is called a compound entry.

All of the following statements accurately describe the debt ratio except.

_______________ is the process of transferring journal entry information from the journal to the ledger.

Revenues and expenses are two categories of ____________________ accounts.

J. Brown Consulting paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

When a company provides services for which cash will not be received until some future date, the company should record the amount charged as accounts receivable.

The company paid $100 cash in dividends to J. Smith, the owner. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?

Asset accounts are normally decreased by debits.

If common stock account had a $10,000 credit balance at the beginning of the period, and during the period, the stockholders invest an additional $5,000, the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.