Exam 2: The Recording Process

For each of the following accounts indicate the effects of (a) a debit and (b) the normal account balance. 1. Notes Payable 2. Prepaid Insurance 3. Salaries and Wages Expense 4. Service Revenue 5. Equipment 6. Owner's Capital

Madrid Industries purchased supplies for $1200. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1200 a credit to a liability account for $700. Which of the following would be the correct way to complete the recording of the transaction?

The best interpretation of the word credit is the

Eight transactions are recorded in the following T-accounts: Indicate for each debit and each credit: (a) whether an asset liability capital drawing revenue or expense account was affected and (b) whether the account was increased (+) or (-) decreased. Answers should be presented in the following chart form:

Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.

At January 31 2016 the balance in Bigelow Inc.'s supplies account was $780. During February Bigelow purchased supplies of $900 and used supplies of $1150. At the end of February the balance in the supplies account should be

The process of entering an amount on the left side of an account is called ____________ the account and making an entry on the right side is called _________________ the account.

Able2 Company received a cash advance of $800 from a customer. As a result of this event

When three or more accounts are required in one journal entry the entry is referred to as a ________________ entry.

After journal entries are posted the reference column

During an accounting period a business has numerous transactions affecting each of the following accounts. State for each account whether it is likely to have (a) debit entries only (b) credit entries only or (c) both debit and credit entries.

Which of the following rules is incorrect?

Sigur Ros Company is a newly organized business. The list of accounts to be opened in the general ledger is as follows: Accounts Payable Prepaid Insurance Accounts Receivable Prepaid Rent Accumulated Depreciation - Equip. Rent Expense Cash Salaries and Wages Expense Depreciation Expense Salaries and Wages Payable Equipment Service Revenue Insurance Expense Supplies Owner's Capital Supplies Expense Owner's Drawings Instructions Organize the accounts into the order in which they should appear in the ledger of Sigur Ros Company and assign account numbers. Use the following system to assign account numbers. 1-199 Assets 200-299 Liabilities 300-399 Owner's Equity 400-499 Revenues 500-599 Expenses

When the volume of transactions is large recording them in tabular form is more efficient than using journals and ledgers.

The normal balance of all accounts is a debit.

Revenues are a subdivision of owner's capital.

The standard form of a journal entry has the

Transactions are entered in the ledger accounts and then transferred to journals.

The usual ordering of accounts in the general ledger is

After a transaction has been posted the reference column in the journal should not be blank.