Question 1

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Accepted Answer

A) True 
 B)False  True

Question 2

Smiles Entertainment had the following accounts and balances at December 31: $$\begin{array} { | l | r | r | } 
\hline \text { Account } & \text { Debit } & \text { Credit } \
\hline \text { Cash } & \$ 10,000 & \
\hline \text { Acoounts Receivable } & 2,000 & \
\hline \text { Prepaid Insurance } & 2,400 & \
\hline \text { Supplies } & 1,000 & \
\hline \text { Acoounts Payable } & & \$ 5,000 \
\hline \text { Common Stock } & & 4,900 \
\hline \text { Service Revenue } &  & 7,000 \
\hline \text { Salaries Expense } &500 & \
\hline \text { Utilities Expense } & 1,000\
\hline \text { Totals } &  \$ 16,900 & \$ 16,900  \
\hline
\end{array}$$ Using the information in the table, calculate the company's reported net income for the period.

Accepted Answer

A) $1,100. 
B) $4,000. 
C) $4,500. 
D) $10,400. 
E) $5,500. 
A) $1,100. 
B) $4,000. 
C) $4,500. 
D) $10,400. 
E) $5,500. E

Question 3

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

Accepted Answer

liability

Question 4

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of BBB Company sends a $2,500 invoice to...

Question 5

A debit:

Accepted Answer

A) Always increases an account. 
B) Is the right-hand side of a T-account. 
C) Always decreases an account. 
D) Is the left-hand side of a T-account. 
E) Is not need to record a transaction. 
A) Always increases an account. 
B) Is the right-hand side of a T-account. 
C) Always decreases an account. 
D) Is the left-hand side of a T-account. 
E) Is not need to record a transaction.

Question 6

The general journal is known as the book of final entry because financial statements are prepared from it.

Accepted Answer

A) True 
 B)False

Question 7

A revenue account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 8

Unearned revenues are generally:

Accepted Answer

A) Revenues that have been earned and received in cash. 
B) Revenues that have been earned but not yet collected in cash. 
C) Liabilities created when a customer pays in advance for products or services before the revenue is earned. 
D) Recorded as an asset in the accounting records. 
E) Increases to stockholders equity. 
A) Revenues that have been earned and received in cash. 
B) Revenues that have been earned but not yet collected in cash. 
C) Liabilities created when a customer pays in advance for products or services before the revenue is earned. 
D) Recorded as an asset in the accounting records. 
E) Increases to stockholders equity.

Question 9

Identify the correct formula below used to calculate the debt ratio.

Accepted Answer

A) Total Equity/Total Liabilities. 
B) Total Liabilities/Total Equity. 
C) Total Liabilities/Total Assets. 
D) Total Assets/Total Liabilities. 
E) Total Equity/Total Assets. 
A) Total Equity/Total Liabilities. 
B) Total Liabilities/Total Equity. 
C) Total Liabilities/Total Assets. 
D) Total Assets/Total Liabilities. 
E) Total Equity/Total Assets.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

You increase the Service Revenue account on the ___________ side of its account.

Accepted Answer

The answer of You increase the Service Revenue account on...

Question 12

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

Accepted Answer

balance co

Question 13

The right side of a T-account is a(n):

Accepted Answer

A) Debit. 
B) Increase. 
C) Credit. 
D) Decrease. 
E) Account balance. 
A) Debit. 
B) Increase. 
C) Credit. 
D) Decrease. 
E) Account balance.

Question 14

Identify the account below that is classified as an asset account:

Accepted Answer

A) Unearned Revenue 
B) Accounts Payable 
C) Supplies 
D) Common Stock 
E) Service Revenue 
A) Unearned Revenue 
B) Accounts Payable 
C) Supplies 
D) Common Stock 
E) Service Revenue

Question 15

Crediting an expense account decreases it.

Accepted Answer

A) True 
 B)False

Question 16

Describe what source documents are and the purpose they serve in a business.

Accepted Answer

Source documents are the proof that tran

Question 17

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Accepted Answer

A) Supplies, understated $130; Fees Earned, overstated $130. 
B) Supplies, understated $260; Fees Earned, overstated $130. 
C) Supplies, overstated $130; Fees Earned, overstated $130. 
D) Supplies, overstated $130; Fees Earned, understated $130. 
E) Supplies, overstated $260; Fees Earned, understated $130. 
A) Supplies, understated $130; Fees Earned, overstated $130. 
B) Supplies, understated $260; Fees Earned, overstated $130. 
C) Supplies, overstated $130; Fees Earned, overstated $130. 
D) Supplies, overstated $130; Fees Earned, understated $130. 
E) Supplies, overstated $260; Fees Earned, understated $130.

Question 18

Identify the statement below that is correct.

Accepted Answer

A) The left side of a T-account is the credit side. 
B) Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts. 
C) The left side of a T-account is the debit side. 
D) Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts. 
E) In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction. 
A) The left side of a T-account is the credit side. 
B) Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts. 
C) The left side of a T-account is the debit side. 
D) Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts. 
E) In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

Question 19

Transactions are recorded first in the ledger and then transferred to the journal.

Accepted Answer

A) True 
 B)False

Question 20

For each of the accounts in the following table (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account.
Account Type
Normal Balance
a. Wages Expense
b. Accounts Receivable
c. Commissions Earned
d. Salaries Payable
e. Common Stock
f. Unearned Advertising Revenue
g. Salaries Expense
h. Magazine Subscription Revenue
i. Dividends
j. Prepaid Insurance

Accepted Answer

The answer of For each of the accounts in the...

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

A debit:

The general journal is known as the book of final entry because financial statements are prepared from it.

A revenue account normally has a debit balance.

Unearned revenues are generally:

Identify the correct formula below used to calculate the debt ratio.

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

You increase the Service Revenue account on the ___________ side of its account.

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

The right side of a T-account is a(n):

Identify the account below that is classified as an asset account:

Crediting an expense account decreases it.

Describe what source documents are and the purpose they serve in a business.

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Identify the statement below that is correct.

Transactions are recorded first in the ledger and then transferred to the journal.

Accounting in Business

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters

Exam 2: Accounting for Business Transactions

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

A debit:

The general journal is known as the book of final entry because financial statements are prepared from it.

A revenue account normally has a debit balance.

Unearned revenues are generally:

Identify the correct formula below used to calculate the debt ratio.

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

You increase the Service Revenue account on the ___________ side of its account.

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

The right side of a T-account is a(n):

Identify the account below that is classified as an asset account:

Crediting an expense account decreases it.

Describe what source documents are and the purpose they serve in a business.

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Identify the statement below that is correct.

Transactions are recorded first in the ledger and then transferred to the journal.

Accounting in Business

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Filters