Exam 2: Recording Business Transactions

A business makes a cash payment to a supplier for office supplies that were purchased earlier on account. Which of the following accounts is debited?

Which is a true statement regarding the accounting equation?

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

Calculate the debt ratio using the following trial balance of Harmony Instruments Company as of December 31, 2017.

"All debits are increases and all credits are decreases." Is this a correct statement? Explain your answer.

Which of the following statements is true of a trial balance?

A shortened form of the ledger is called a ________.

The trial balance reports the balances of assets, liabilities, and equity.

The ability of a company to repay its liabilities can be determined from its ________.

Sharon Foods Company reported the following transactions for September 2017. a) The business received a $21,000 cash contribution from the owner. It was credited to Sharon, Capital. b) The business purchased office equipment for $9,000 for which $4,000 cash was paid and the balance was put on a note payable. c) Paid insurance expense of $1,500 cash. d) Paid the September utility bill for $800 cash. e) Paid $1,600 cash for September rent. f) The business had sales of $12,000 in September. Of these sales, 40% were cash sales, and the balance was credit sales. g) The business paid $8,000 cash for office furniture. What are the total liabilities at the end of September, 2017?

Owner's Withdrawals is a(n) ________ account that has a normal ________ balance.

When a business collects cash, the Cash account is debited.

The following transactions have been journalized and posted to the proper accounts. Prepare a trial balance at the end of the first month using the following details: a) Received a $15,000 cash contribution from the owner. b) Paid the first month's rent with $800 cash. c) Purchased equipment by paying $4,000 cash and executing a note payable for $4,000. d) Purchased office supplies for $200 cash. The supplies remain at the end of the month. e) Billed clients for a total of $7,000 for design services rendered. f) Received $1,000 cash from clients for services rendered above.

Which of the following is a liability account?

An accounting entry that is characterized by having multiple debits and/or multiple credits is called a ________ entry.

Which of the following is provided in a typical chart of accounts?

Companies use a ledger to show all of the increases and decreases in each account along with their balances.

Unearned revenue is a liability account.

When using a four-column account, the posting reference column allows the user of the financial data to trace the amounts in the journal back to the ledger.

Which of the following is the record holding all the accounts, the changes in those accounts, and their balances?