Question 1

Asset accounts normally have credit balances and expense accounts normally have debit balances.

Accepted Answer

A) True 
 B)False

Question 2

The debt ratio is used:

Accepted Answer

A)  To measure the amount of equity relative to the expenses. 
B)  To reflect the risk associated with a company's debts. 
C)  Only by banks when a business applies for a loan. 
D)  To determine how much debt a firm should pay off. 
E)  To determine who a company owes. 
A)  To measure the amount of equity relative to the expenses. 
B)  To reflect the risk associated with a company's debts. 
C)  Only by banks when a business applies for a loan. 
D)  To determine how much debt a firm should pay off. 
E)  To determine who a company owes.

Question 3

Increases in assets are _______________, while increases in liabilities are _______________.

Accepted Answer

The answer of Increases in assets are _______________, while increases...

Question 4

Which of the following statements 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 5

A list of all accounts used by a company and the identification number assigned to each account is called a:

Accepted Answer

A)  Ledger 
B)  Journal 
C)  Trial balance 
D)  Chart of accounts 
E)  General Journal 
A)  Ledger 
B)  Journal 
C)  Trial balance 
D)  Chart of accounts 
E)  General Journal

Question 6

Items such as sales slips, invoices, checks, and purchase orders are source documents.

Accepted Answer

A) True 
 B)False

Question 7

The second step in the analyzing and recording process is to record the transactions and events in the _____________________________.

Accepted Answer

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

Question 8

Which of the following is a true statement regarding debits and credits?

Accepted Answer

A)  If a company earned a profit, debits will not equal credits. 
B)  For a business, debits are better than credits. 
C)  A company's books are not in balance if they have a current period loss. 
D)  Assets and expenses are both increased with a debit. 
E)  Liabilities and equity are both increased with a debit. 
A)  If a company earned a profit, debits will not equal credits. 
B)  For a business, debits are better than credits. 
C)  A company's books are not in balance if they have a current period loss. 
D)  Assets and expenses are both increased with a debit. 
E)  Liabilities and equity are both increased with a debit.

Question 9

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
 $\begin{array}{|l|r|r|}
\hline & \text { Assets } & \text { Liabilities } \
\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \
\hline \text { End of the year } & 135,000 & 73,000 \
\hline
\end{array}$ If the owners invested an additional $12,000 in the business during the year, but no dividends were paid, what was the amount of net income earned by Josephine's Bakery during the current year?

Accepted Answer

Beginning owner's equity = $114,000 - $6

Question 10

The account used to record the transfers of assets from a business to its stockholders is:

Accepted Answer

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

Question 11

Of the following accounts, the one that normally has a credit balance is:

Accepted Answer

A)  Cash 
B)  Office Equipment 
C)  Sales Salaries Payable 
D)  Dividends 
E)  Sales Salaries Expense 
A)  Cash 
B)  Office Equipment 
C)  Sales Salaries Payable 
D)  Dividends 
E)  Sales Salaries Expense

Question 12

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 each transaction in the place 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. 
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 each transaction in the place 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 13

What would be the account balance in Accounts Receivable after the following transactions, assuming a zero beginning balance? $\begin{array}{|l|l|}
\hline \text { Performed services and left a bill. } & \$ 4,200 \
\hline \text { Performed services and collected immediately. } & \$ 3,500 \
\hline \text { Performed services and billed customer. } & \$ 2,200 \
\hline \text { Performed services on account. } & \$ 6,000 \
\hline \text { Received partial payment on account. } & \$ 1,500 \
\hline
\end{array}$

Accepted Answer

A)  $17,400 
B)  $10,900 
C)  $14,400 
D)  $ 4,500 
E)  $ 2,000 
A)  $17,400 
B)  $10,900 
C)  $14,400 
D)  $ 4,500 
E)  $ 2,000

Question 14

A trial balance that balances is not proof of complete accuracy in recording transactions.

Accepted Answer

A) True 
 B)False

Question 15

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:
 $\begin{array}{|l|r|r|}
\hline & \text { Assets } & \text { Liabilities } \
\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \
\hline \text { End of the year } & 135,000 & 73,000 \
\hline
\end{array}$ If the owners invested an additional $12,000 in the business and dividends of $5,000 were paid during the year, what was the amount of net income earned by Josephine's Bakery during the current year?

Accepted Answer

Beginning owner's equity = $114,000 - $6

Question 16

What would be the account balance in the Cash account after the following transactions, assuming a zero beginning balance? $\begin{array}{|l|l|}
\hline \text { Owner invested cash. } & \$ 100,000 \
\hline \text { Purchased supplies with cash. } & \$ 20,000 \
\hline \text { Received bill for one month of rent. } & \$ 2,200 \
\hline \text { Paid wages. } & \$ 800 \
\hline \text { Billed customer for services per formed services } & \$ 1,250 \
\hline
\end{array}$

Accepted Answer

A)  $124,250 
B)  $80,150 
C)  $78,250 
D)  $79,200 
E)  $80,450 
A)  $124,250 
B)  $80,150 
C)  $78,250 
D)  $79,200 
E)  $80,450

Question 17

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

Accepted Answer

A) True 
 B)False

Question 18

Unearned revenues are classified as liabilities.

Accepted Answer

A) True 
 B)False

Question 19

Transactions are first recorded in the ledger.

Accepted Answer

A) True 
 B)False

Question 20

A credit entry:

Accepted Answer

A)  Increases asset and expense accounts and decreases liability, common stock, and revenue accounts. 
B)  Is always a decrease in an account. 
C)  Decreases asset and expense accounts and increases liability, common stock, and revenue accounts. 
D)  Is recorded on the left side of a T-account. 
E)  Is always an increase in an account. 
A)  Increases asset and expense accounts and decreases liability, common stock, and revenue accounts. 
B)  Is always a decrease in an account. 
C)  Decreases asset and expense accounts and increases liability, common stock, and revenue accounts. 
D)  Is recorded on the left side of a T-account. 
E)  Is always an increase in an account.

Asset accounts normally have credit balances and expense accounts normally have debit balances.

The debt ratio is used:

Increases in assets are _, while increases in liabilities are _.

Which of the following statements is incorrect?

A list of all accounts used by a company and the identification number assigned to each account is called a:

Items such as sales slips, invoices, checks, and purchase orders are source documents.

The second step in the analyzing and recording process is to record the transactions and events in the _____________________________.

Which of the following is a true statement regarding debits and credits?

The account used to record the transfers of assets from a business to its stockholders is:

Of the following accounts, the one that normally has a credit balance is:

A general journal is:

A trial balance that balances is not proof of complete accuracy in recording transactions.

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

Unearned revenues are classified as liabilities.

Transactions are first recorded in the ledger.

A credit entry:

Introducing Financial Accounting

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Time Value of Money

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Exam 2: Accounting for Transactions

Asset accounts normally have credit balances and expense accounts normally have debit balances.

The debt ratio is used:

Increases in assets are _______________, while increases in liabilities are _______________.

Which of the following statements is incorrect?

A list of all accounts used by a company and the identification number assigned to each account is called a:

Items such as sales slips, invoices, checks, and purchase orders are source documents.

The second step in the analyzing and recording process is to record the transactions and events in the _____________________________.

Which of the following is a true statement regarding debits and credits?

The account used to record the transfers of assets from a business to its stockholders is:

Of the following accounts, the one that normally has a credit balance is:

A general journal is:

A trial balance that balances is not proof of complete accuracy in recording transactions.

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

Unearned revenues are classified as liabilities.

Transactions are first recorded in the ledger.

A credit entry:

Introducing Financial Accounting

Preparing Financial Statements

Accounting for Merchandising Operations

Accounting for Inventories

Accounting for Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Accounting for Equity

Accounting for Cash Flows

Interpreting Financial Statements

Time Value of Money

Investments and International Operations

Accounting for Partnerships

Accounting With Special Journals

Filters

Increases in assets are _, while increases in liabilities are _.