Exam 2: The Recording Process

At January 1 2016 Croc Industries reported owner's capital of $140000. During 2016 Croc had a net loss of $30000 and owner drawings of $15000. At December 31 2016 the amount of owner's capital is

A new account is opened for each transaction entered into by a business firm.

The recording process becomes more efficient and informative if all transactions are recorded in one account.

At September 1 2016 Hotel Suites Co. reported owner's capital of $147000. During the month Hotel Suites generated revenues of $48000 incurred expenses of $26000 purchased equipment for $5000 and withdrew cash of $3000. What is the amount of owner's capital at September 30 2016?

Which of the following statements is false?

During a study session a classmate states that it is not necessary to make journal entries and then post them to the ledger. She states that it is sufficient to analyze the transaction and simply record the information in T-accounts. What is your response to this statement? Be brief yet concise.

European companies rely

Transactions for Joan Jett Company for the month of October are presented below. Journalize each transaction and identify each transaction by number. You may omit journal explanations. 1. Invested $42000 cash in the business. 2. Purchased land costing $28000 for cash. 3. Purchased equipment costing $18000 for $4000 cash and the remainder on credit. 4. Purchased supplies on account for $800. 5. Paid $1200 for a one-year insurance policy. 6. Received $3500 cash for services performed. 7. Received $4000 for services previously performed on account. 8. Paid wages to employees for $2800. 9. Petty withdrew $2300 cash from the business.

An account is often referred to as a T-account because of the way it is constructed.

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

The complete effect of a transaction on the accounts is disclosed in the journal.

An account is an individual accounting record of increases and decreases in specific

The first step in posting involves

The trial balance will not balance when incorrect account titles are used in journalizing or posting.

A compound journal entry involves

In recording business transactions evidence that an accounting transaction has taken place is obtained from

A sales slip a check and a cash register tape are examples of ________________ used as evidence that a transaction has taken place.

An account consists of

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

For each of the following accounts indicate (a) the type of account (Asset Liability Owner's Equity Revenue Expense) (b) the debit and credit effects and (c) the normal account balance. 0. Cash a. Asset account b. Debit increases, credit decreases c. Normal balance - debit Accounts 1. Accounts Payable 5. Service Revenue 2. Accounts Receivable 6. Insurance Expense 3. Owner's Capital 7. Notes Payable 4. Owner's Drawings 8. Equipment