Question 1

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

Accepted Answer

A) 38.6%. 
B) 13.4%. 
C) 34.9%. 
D) 25.9%. 
E) 14.9%. 
A) 38.6%. 
B) 13.4%. 
C) 34.9%. 
D) 25.9%. 
E) 14.9%.

Question 2

On May 31,the Cash account of Bottle's R US had a normal balance of $5,000.During May,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of May?

Accepted Answer

A) A $0 balance. 
B) A $4,300 debit balance. 
C) A $4,300 credit balance. 
D) A $5,700 debit balance. 
E) A $5,700 credit balancE.Beginning Cash Balance + Debits - Credits = Ending Cash Balance 
A) A $0 balance. 
B) A $4,300 debit balance. 
C) A $4,300 credit balance. 
D) A $5,700 debit balance. 
E) A $5,700 credit balancE.Beginning Cash Balance + Debits - Credits = Ending Cash Balance

Question 3

Based on the following trial balance for Sally's Salon,prepare an income statement,statement of owner's equity,and a balance sheet.Sally Crawford made no additional investments in the company during the year.

Accepted Answer

The answer of Based on the following trial balance for...

Question 4

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

Accepted Answer

A) $150 understated. 
B) $135 overstated. 
C) $150 overstated. 
D) $15 understated. 
E) $135 understateD.$150 - 15 = $135 
A) $150 understated. 
B) $135 overstated. 
C) $150 overstated. 
D) $15 understated. 
E) $135 understateD.$150 - 15 = $135

Question 5

Revenues and expenses are two categories of ____________________ accounts.

Accepted Answer

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

Question 6

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. 
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 7

A revenue account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 8

Geraldine Parker,the owner of Gi Gi's Dance Studio,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)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 9

At the beginning of January of the current year,Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable.During January,the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500.Additionally,during January one customer paid Mikey $5,000 for services to be provided in the future.At the end of January,the balance in the accounts receivable account should be:

Accepted Answer

A) $54,700. 
B) $49,700. 
C) $2,300. 
D) $54,300. 
E) $49,300. 
A) $54,700. 
B) $49,700. 
C) $2,300. 
D) $54,300. 
E) $49,300.

Question 10

If a company is highly leveraged,this means that it has relatively high risk of not being able to repay its debt.

Accepted Answer

A) True 
 B)False

Question 11

A company's formal promise to pay (in the form of a promissory note)a future amount is a(n):

Accepted Answer

A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable. 
A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable.

Question 12

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

Question 13

The following trial balance is prepared from the general ledger of HG's Auto Maintenance.   Because the trial balance did not balance,you decided to examine the accounting records.You found that the following errors had been made:
1.A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable.
2.An investment of $500 cash by the owner was debited to Hal Griffin,Capital and credited to Cash.
3.In computing the balance of the Accounts Receivable account,a debit of $600 was omitted from the computation.
4.One debit of $300 to the Hal Griffin,Withdrawals account was posted as a credit.
5.Office equipment purchased for $800 was posted to the Shop Equipment account.
6.One entire entry was not posted to the general ledger.The transaction involved the receipt of $125 cash for repair services performed for cash.
Prepare a corrected trial balance for the HG's Auto Maintenance as of October 31.

Accepted Answer

@#IMG-DLM& ^aCash: Balance $1,975 + $1,000(#2)+ 125(

Question 14

For each of the following accounts,identify whether a debit or credit yields the indicated change.

Accepted Answer

The answer of For each of the following accounts,identify whether...

Question 15

A _______________ is a list of all the accounts used by a company and their identification codes but does not contain the balances.

Accepted Answer

The answer of A _______________ is a list of all...

Question 16

Cash withdrawn by the owner of a proprietorship for personal expenses,should be treated as an expense of the business.

Accepted Answer

A) True 
 B)False

Question 17

Asset accounts are normally decreased by debits.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 20

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Accepted Answer

A) Withdrawals account. 
B) Capital account. 
C) Drawing account. 
D) T-account. 
E) Balance column sheet. 
A) Withdrawals account. 
B) Capital account. 
C) Drawing account. 
D) T-account. 
E) Balance column sheet.

Exam 2: Analyzing and Recording Transactions

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

On May 31,the Cash account of Bottle's R US had a normal balance of $5,000.During May,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of May?

Based on the following trial balance for Sally's Salon,prepare an income statement,statement of owner's equity,and a balance sheet.Sally Crawford made no additional investments in the company during the year.

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

Revenues and expenses are two categories of ____________________ accounts.

Identify the statement that is incorrect.

A revenue account normally has a debit balance.

Geraldine Parker,the owner of Gi Gi's Dance Studio,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.

If a company is highly leveraged,this means that it has relatively high risk of not being able to repay its debt.

A company's formal promise to pay (in the form of a promissory note)a future amount is a(n):

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

For each of the following accounts,identify whether a debit or credit yields the indicated change.

A _______________ is a list of all the accounts used by a company and their identification codes but does not contain the balances.

Cash withdrawn by the owner of a proprietorship for personal expenses,should be treated as an expense of the business.

Asset accounts are normally decreased by debits.

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

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.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Accounting in Business

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Appendix B: Time Value of Money

Appendix C: Activity-Based Costing

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