Exam 2: Recording Business Transactions

A business pays $500 cash for office supplies. Which of the following accounts is credited?

Balancing errors can be detected by computing the difference between total debits and total credits on the trial balance.

The first step in the journalizing and posting process is to ________.

A business receives $40,000 for services that it will perform over the next four months. Which of the following accounts is credited?

The debt ratio shows the proportion of assets financed with debt.

Which of the following is a liability account?

A business makes a cash payment of $12,000 to a creditor. Which of the following accounts is credited?

The account title used for recording the payment of rent in advance for an office building is ________.

Which of the following is used by both internal and external users?

Accounts Receivable is a(n) ________ account and has a normal ________ balance.

Grace Paper Company has a debt ratio of 25%, which means that 75% of the assets are financed by creditors.

Which of the following accounts increases with a credit?

The higher the debt ratio, the lower the risk.

A journal entry for a $270 payment to purchase office supplies was erroneously recorded as a debit to Office Supplies for $520 and a credit to Cash for $270. Which of the following statements correctly states the effect of the error on the trial balance?

Whitney Chemicals Company received cash contribution of $40,000 from the owner of the business. Which of the following accounts will be credited?

Mitchell Florists reported assets of $1,400 and equity of $350. What is its debt ratio? (Round your percentage answer to two decimal places.)

The following transactions for the month of March have been journalized and posted to the proper accounts. Mar. 1 The business received a $9,000 cash contribution from the owner. Mar) 2 Paid the first month's rent of $600. Mar) 3 Purchased equipment by paying $4,000 cash and executing a note payable for $5,000. Mar) 4 Purchased office supplies for $600 cash. Mar) 5 Billed a client for $10,000 of design services completed. Mar) 6 Received $8,000 on account for the services previously recorded. What is the balance in Accounts Receivable?

A business renders services to a customer for $26,000 on account. Which of the following accounts is debited?

At the end of a month, a business shows the following balances in its ledger. Use this data to prepare a trial balance.

Data from a trial balance is used to prepare the income statement, statement of owner's equity, and the balance sheet.