Exam 2: Analyzing and Recording Transactions

While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

The accounting cycle begins with

Purchasing supplies on credit increases assets while decreasing liabilities.

Increases in liabilities are recorded as debits.

Unearned revenues are

What is double-entry accounting?

Discuss the use of the trial balance.

A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.

Which of the following statements is correct?

The first step in the accounting cycle is to analyze transactions.

The following list of accounts is for Shannon Sales Co.: Use the form below to identify the type of account and its normal balance. The first one has been done for you as an example.

A business paid $2,500 to satisfy a previously recorded account payable. Set up two or more T-accounts below and show how this transaction would be recorded directly in those accounts.

Since all figures are eventually posted to the ledger, the posting reference column in a journal is not necessary.

Explain the difference between a ledger and a chart of accounts.

What are prepaid expenses?

Debits increase asset and expense accounts.

Discuss how the following transactions affect accounts and financial statements. (1) Jillian Robb invested $30,000 cash in Profile Design Co. (2) Profile Design Co. purchased supplies for $5,000 on its credit card. (3) Profile Design Co. purchased equipment for $19,000 and signed a note payable.

Debits to accounts are normally decreases.

Of the following errors, which one by itself will cause the trial balance to be out of balance?

The trial balance is a list of the accounts that have balances in the ledger.