Exam 2: The Recording Process

Prepare journal entries in good form for each of the following transactions concerning the business J. Morris, Architect. a. On July 5, Morris prepared a set of drawings for a customer and billed the customer $1,500. b. On July 10, bought $300 of drafting supplies for cash. c. On July 15, paid $800 in salaries for the assistant. d. On July 18, collected $900 from the July 5 transaction. e. On July 20, paid $600 for a one-year insurance policy in advance. f. On July 22, a cash advance of $800 is received from a client for services to be performed in August.

What are the normal balances of the following type of accounts?

Fill in the blanks with debit or credit to complete the following sentences correctly. a. Assets are increased by a _______________. b. Liabilities are increased by a ______________. c. The normal balance of a revenue account is a _______________. d. A ______________ would decrease a liability account. e. The normal balance of the drawings account is a ______________. f. A ______________ would increase an expense account.

Which of the following accounts would be increased with a debit?

Should the following transactions be recorded and why? a. The owner of a company purchases a computer for personal use b. A company provides services to one of its customers on account. c. A company purchases a machine and pays with cash. d. A company places an order with one of its supplier for inventory to be shipped next month.

Assets and liabilities are both decreased by credits.

Assets = Liabilities + Owner's Capital - Drawings + Revenues - Expenses is a correct form of the expanded basic accounting equation.

To debit an account, an amount is entered on the __________ side. To credit an account, an amount is entered on the __________ side.

Owner's equity is increased by owner's investments and revenues.

A purchase of office equipment for cash requires a credit to:

The ledger is also known as the book of original entry.

An account will have a credit balance if the total debit amounts exceed the total credit amounts.

Debits should be listed before credits in journal entries

The posting phase of the recording process makes it possible to accumulate the effects of journalized transactions in individual accounts.

The owner's capital account is increased by credits.

When the columns of the trial balance equal each other, it proves no errors occurred in recording and posting.

The right side of an account is referred to as the:

Give examples of errors that would not be detected by the preparation of a trial balance.

The basic steps in the recording process are (1) analyze each transaction, (2) enter the transaction in a journal, and (3) transfer the journal information to the appropriate ledger accounts.

The equality of the accounting equation can be proven by preparing a: