Question 1

As prepaid expenses are used up, the costs of these assets become expenses.

Accepted Answer

A) True 
 B)False

Question 2

In which of the following situations would the trial balance not balance?

Accepted Answer

A)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable. 
C)  A $50 cash receipt for the performance of a service was not recorded at all. 
D)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750. 
A)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable. 
C)  A $50 cash receipt for the performance of a service was not recorded at all. 
D)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

Question 3

The balance sheet provides a link between beginning and ending income statements.

Accepted Answer

A) True 
 B)False

Question 4

The higher the debt ratio, the higher risk of a company not being able to meet its obligations.

Accepted Answer

A) True 
 B)False

Question 5

The following transactions occurred during July: 
A.Received $900 cash for services provided to a customer during July.
B. Received $2,200 cash investment from Barbara Hanson, the owner of the business.
C. Received $750 from a customer in partial payment of his account receivable, which arose from sales in June.
D. Provided services to a customer on credit, $375.
E. Signed a promissory note for a $6,000 bank loan.
F. Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A)  $900 
B)  $1,275 
C)  $2,525 
D)  $3,275 
E)  $11,100 
A)  $900 
B)  $1,275 
C)  $2,525 
D)  $3,275 
E)  $11,100

Question 6

High financial leverage is always bad for a company's owners.

Accepted Answer

A) True 
 B)False

Question 7

Stride Rite had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

Accepted Answer

$130 milli

Question 8

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 9

A company had the following account balances at year-end: Cash……………………………………… $30,000
Accounts receivable……………………… 32,000
Accounts payable………………………… 20,000
Fees earned…………………………………..65,000
Rent expense…………………………………15,000
Insurance expense……………………………..4,800
Supplies………………………………………..5,000
Common stock………………………………. 5,000
Retained earnings………………………….....14,800
Dividends………………………………… 18,000
If all of the accounts have normal balances, what are the total debits on the trial balance?

Accepted Answer

A)  $45,200 
B)  $67,000 
C)  $104,800 
D)  $209,600 
E)  $186,600 
A)  $45,200 
B)  $67,000 
C)  $104,800 
D)  $209,600 
E)  $186,600

Question 10

Prepaid expenses are:

Accepted Answer

A)  Payments made for products and services that do not ever expire. 
B)  Classified as liabilities on the balance sheet. 
C)  Decreases in retained earnings. 
D)  Assets that represent prepayments of future expenses. 
E)  Promises of payments by customers. 
A)  Payments made for products and services that do not ever expire. 
B)  Classified as liabilities on the balance sheet. 
C)  Decreases in retained earnings. 
D)  Assets that represent prepayments of future expenses. 
E)  Promises of payments by customers.

Question 11

Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.

Accepted Answer

a.
 @#IMG-DLM& b.
 @#IMG-DLM&

Question 12

A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):

Accepted Answer

A)  Journal 
B)  Posting 
C)  Trial balance 
D)  Account 
E)  Chart of accounts 
A)  Journal 
B)  Posting 
C)  Trial balance 
D)  Account 
E)  Chart of accounts

Question 13

A written promise to pay a definite sum of money on a specific future date 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 14

A _______________ is a list of all the accounts used by a company and their identification codes.

Accepted Answer

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

Question 15

The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.

Accepted Answer

A) True 
 B)False

Question 16

Which financial statements are prepared for a period of time?

Accepted Answer

A)  Income statement, statement of retained earnings, balance sheet and statement of cash flows. 
B)  Balance sheet. 
C)  Income statement, statement of retained earnings, and statement of cash flows. 
D)  Income statement and balance sheet. 
E)  Statement of retained earnings and statement of cash flows. 
A)  Income statement, statement of retained earnings, balance sheet and statement of cash flows. 
B)  Balance sheet. 
C)  Income statement, statement of retained earnings, and statement of cash flows. 
D)  Income statement and balance sheet. 
E)  Statement of retained earnings and statement of cash flows.

Question 17

FastForward 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 FastForward purchased $25,000 of equipment for cash....

Question 18

Which of the following accounts is a balance sheet account?

Accepted Answer

A)  Wages Payable 
B)  Operating Activities 
C)  Revenues 
D)  Dividends 
E)  Expenses 
A)  Wages Payable 
B)  Operating Activities 
C)  Revenues 
D)  Dividends 
E)  Expenses

Question 19

List the steps in processing transactions.

Accepted Answer

Business transactions and events are the

Question 20

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

Accepted Answer

A)  $150 understated 
B)  $135 overstated 
C)  $150 overstated 
D)  $15 understated 
E)  $135 understated 
A)  $150 understated 
B)  $135 overstated 
C)  $150 overstated 
D)  $15 understated 
E)  $135 understated

As prepaid expenses are used up, the costs of these assets become expenses.

In which of the following situations would the trial balance not balance?

The balance sheet provides a link between beginning and ending income statements.

The higher the debt ratio, the higher risk of a company not being able to meet its obligations.

High financial leverage is always bad for a company's owners.

Stride Rite had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Prepaid expenses are:

A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):

A written promise to pay a definite sum of money on a specific future date is a(n):

A _______________ is a list of all the accounts used by a company and their identification codes.

The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.

Which financial statements are prepared for a period of time?

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

Which of the following accounts is a balance sheet account?

List the steps in processing transactions.

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

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

As prepaid expenses are used up, the costs of these assets become expenses.

In which of the following situations would the trial balance not balance?

The balance sheet provides a link between beginning and ending income statements.

The higher the debt ratio, the higher risk of a company not being able to meet its obligations.

High financial leverage is always bad for a company's owners.

Stride Rite had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Prepaid expenses are:

A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):

A written promise to pay a definite sum of money on a specific future date is a(n):

A _______________ is a list of all the accounts used by a company and their identification codes.

The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.

Which financial statements are prepared for a period of time?

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

Which of the following accounts is a balance sheet account?

List the steps in processing transactions.

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

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

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