Question 1

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

Accepted Answer

A) True 
 B)False  True

Question 2

A dividend normally has a debit balance.

Accepted Answer

A) True 
 B)False  True

Question 3

A double-entry accounting system is an accounting system:

Accepted Answer

A)  That records each transaction twice.
B)  That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D)  That may only be used if T-accounts are used.
E)  That insures that errors never occur. B

Question 4

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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 7

Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is _______________ for $25,000 and the cash account is _______________ for $25,000.

Accepted Answer

The answer of Funky Music purchased $25,000 of equipment for...

Question 8

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

Accepted Answer

A)  35.1%.
B)  26.0%.
C)  38.5%.
D)  28.5%.
E)  58.8%.

Question 9

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

Accepted Answer

A)  The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.
B)  The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.
C)  The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.
D)  The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.
E)  The total of the Debit column of the trial balance will equal the total of the Credit column.

Question 10

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 11

The journal is known as a book of original entry.

Accepted Answer

A) True 
 B)False

Question 12

Dividends paid to the stockholders are a business expense.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

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 16

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below by entering appropriate account names, and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of BBB Company sends a $2,500 invoice to...

Question 17

A debit entry is always an increase in the account.

Accepted Answer

A) True 
 B)False

Question 18

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 19

Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:

Accepted Answer

A)  A revenue account.
B)  The dividends account.
C)  The common stock account.
D)  An expense account.
E)  A liability account.

Question 20

Describe the link between a business's income statement, the statement of retained earnings, and the balance sheet.

Accepted Answer

The answer of Describe the link between a business's income...

Exam 2: Accounting System and Financial Statements

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

A dividend normally has a debit balance.

A double-entry accounting system is an accounting system:

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

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.

Identify the statement below that is true.

Funky Music purchased $25,000 of equipment for cash. The Equipment asset account is _ for $25,000 and the cash account is _ for $25,000.

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

The journal is known as a book of original entry.

Dividends paid to the stockholders are a business expense.

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

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

A business's source documents:

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below by entering appropriate account names, and show how this transaction would be recorded directly in those accounts.

A debit entry is always an increase in the account.

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

Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:

Describe the link between a business's income statement, the statement of retained earnings, and the balance sheet.