Exam 2: The Recording Process

A debit to an account indicates an increase in that account.

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?

Evidence that would not help with determining the effects of a transaction on the accounts would be a(n)

A journal is not useful for

The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for assets.

After transaction information has been recorded in the journal, it is transferred to the

Transactions for Tom Petty Company for the month of October are presented below. Journalize each transaction and identify each transaction by number. You may omit journal explanations. 1. Issued ordinary shares in exchange for $50,000 cash. 2. Purchased land costing $28,000 for cash. 3. Purchased equipment costing $20,000 for $3,000 cash and the remainder on credit. 4. Purchased supplies on account for $800. 5. Paid $1,000 for a one-year insurance policy. 6. Received $3,000 cash for services performed. 7. Received $4,000 for services previously performed on account. 8. Paid salaries to employees for $2,500. 9. Paid dividends of $1,000.

The general policy for using proper currency signs (dollar, yen, pound, etc) is the same for both GAAP and this textbook. This policy is as follows

Which of the following statements is false?

Which one of the following is not a part of an account?

Identify the impact on the accounting equation of the following transactions. 1. Purchased 36-month insurance policy for cash. 2. Purchased supplies on account. 3. Received utility bill to be paid at later date. 4. Paid utility bill previously accrued.

All recordable transactions are initially recorded in the journal. Discuss the contributions that the journal makses to the recording process.

If a company has overdrawn its bank balance, then

The bookkeeper for Dole Yard Service made a number of errors in journalizing and posting as described below: 1. A debit posting to accounts receivable for $500 was omitted. 2. A payment of accounts payable for $600 was credited to cash and debited to accounts receivable. 3. A credit to accounts receivable for $650 was posted as $65. 4. A cash purchase of equipment for $561 was journalized as a debit to equipment and a credit to notes payable. The credit posting was made for $516. 5. A debit posting of $300 for purchase of supplies was credited to supplies. 6. A debit to insurance expense for $591 was posted as $519. 7. A debit posting for salaries expense for $900 was made twice. 8. A cash purchase of supplies for $700 was journalized and posted as a debit to supplies for $70 and a credit to cash for $70. Instructions For each error, indicate (a) whether the trial balance will balance; if the trial balance will not balance, indicate (b) the amount of the difference, and (c) the trial balance column that will have the larger total. Consider each error separately. Use the following form, in which error (1) is given as an example.

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.

Your roommate, a marketing major, thinks that debit means decrease and credit means increase. And, that every account can be debited and credited and as result, every account can have both a debit and a credit balance. Explain to your roommate (1) the meaning of debit and credit; (2) which accounts can only be debited, which can only be credited, and which can be both debited and credited; and (3) which accounts normally have debit balances and which credit balances.

At December 1, 2014, Gibson Company's accounts receivable balance was €2,400. During December, Gibson had credit revenues of €10,000 and collected accounts receivable of €8,000. At December 31, 2014, the accounts receivable balance is

On July 7, 2014, Anaya Enterprises performed cash services of $1,400. The entry to record this transaction would include

Selected transactions for Sweet Home, a property management company, in its first month of business, are as follows. Jan. 2 Issued ordinary shares to investors for $15,000 cash. 3 Purchased used car for $4,000 cash for use in business. 9 Purchased supplies on account for $500. 11 Billed customers $1,800 for services performed. 16 Paid $200 cash for advertising. 20 Received $700 cash from customers billed on January 11. 23 Paid creditor $300 cash on balance owed. 28 Paid dividends of $2,000. Instructions For each transaction indicate the following. (a) The basic type of account debited and credited (asset (A), liability (L), equity (E)). (b) The specific account debited and credited (cash, rent expense, service revenue, etc.). (c) Whether the specific account is increased (incr.) or decreased (decr). (d) The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example.