Exam 2: Analyzing and Recording Transactions

At the beginning of January of the current year, Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

The process of transferring general journal entry information to the ledger is called:

The following transactions occurred during July: Received $900 cash for services provided to a customer during July. Received $2,200 cash investment from Bob Johnson, the owner of the business. Received $750 from a customer in partial payment of his account receivable which arose from sales in June. Provided services to a customer on credit, $375. Borrowed $6,000 from the bank by signing a promissory note. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July?

Cash withdrawn by the owner of a proprietorship for personal expenses, should be treated as an expense of the business.

The amount of net income is added on the statement of owner's equity.

Transactions are recorded first in the ledger and then transferred to the journal.

Lu Lu's Catering has a debt ratio equal to .3 and its competitor, Able's Bakery, has a debt ratio equal to .7. Determine the statement below that is correct.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

The journal is known as a book of original entry.

If a company provides services to a customer on credit, the company providing the service should credit Accounts Receivable.

An account used to record the owner's investments in a business is called a(n):

Identify the account below that is classified as an asset in a company's chart of accounts:

ABC Company made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

When a company bills a customer for $700 for services rendered, the journal entry to record this transaction will include a $700 debit to Services Revenue.

The accounting process begins with:

Increases in liability accounts are recorded as debits.

Which of the following is NOT an asset account:

Explain the debt ratio and its use in analyzing a company's financial condition.

"Unearned" accounts are liabilities that must be fulfilled.