Exam 3: Processing Accounting Information

Every transaction affects equal numbers of ledger accounts and is recorded by equal dollar amounts of debits and credits.

Krenshaw Rentals Use the five transactions for Krenshaw Rentals described below to answer the questions that follows. Oct 1 Krenshaw purchases two new saws on credit at $375 each. The saws are added to Krenshaw's rental inventory. Payment is due in 30 days. 8 Krenshaw accepts advance deposits for tool rentals of $75. 15 Krenshaw receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Krenshaw for tool rentals. Payment is due from the customers in 30 days. 31 Krenshaw receives $500 in payments from the customers that were billed for rentals on October 20. -Refer to the transactions for Krenshaw Rentals. Based on the October 8 transaction, Krenshaw will record which of the following in its accounting records?

The initial step in the recording process is posting.

There are three elements to the accounting equation: assets, liabilities, and stockholders' equity. Below are five possible types of transactions. For each of these five types, write descriptions of a example that would illustrate this type of transaction.

Each account has a normal balance. For the following list of accounts, indicate whether the normal balance of each is a debit or a credit. -Unearned Advertising Fees

For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Cash

Which of the following statements is true?

Not all recognizable events are supported by a standard source document.

Krenshaw Rentals Use the five transactions for Krenshaw Rentals described below to answer the questions that follows. Oct 1 Krenshaw purchases two new saws on credit at $375 each. The saws are added to Krenshaw's rental inventory. Payment is due in 30 days. 8 Krenshaw accepts advance deposits for tool rentals of $75. 15 Krenshaw receives a bill from Farmer's Electric Company for $150. Payment is due in 30 days. 20 Customers are charged $750 by Krenshaw for tool rentals. Payment is due from the customers in 30 days. 31 Krenshaw receives $500 in payments from the customers that were billed for rentals on October 20. -If the business has an from a customer, then the customer has an to the business.

An abbreviated version of an account which is useful for analyzing the effects of business transactions is the:

Debits are good and credits are bad in financial terms.

Assets and expenses are ____________________ by credits.

All transactions refer to external events.

Only events that can be measured will be reflected in the journal entries.

From an accounting perspective, what are source documents? Give examples of at least three source documents.

Provide at least three source documents and the related event for which each would provide the evidence to record.

are a distribution of net income for the period, not a determinant of net income as are expenses.

Falcon Services was organized on May 1, 2015. The company received a contribution of $2,000 from each of the two principal owners. During the month, Falcon Services provided services for cash of $1,400 and services on account for $600, received $350 from customers in payment of their accounts, purchased supplies on account for $800 and equipment on account for $1,050, received a utility bill for $150 that will not be paid until June, and paid the full amount due on the equipment. REQUIRED: Show your work to determine the company's Cash balance on May 31, 2015.

A T account for Cash cannot contain any credits.