Question 1

The higher a company's debt ratio is,the higher the risk of a company not being able to meet its obligations.

Accepted Answer

A) True 
 B)False

Question 2

A customer's promise to pay is called an account payable to the seller.

Accepted Answer

A) True 
 B)False

Question 3

A credit is used to record:

Accepted Answer

A) An increase in an expense account. 
B) A decrease in an asset account. 
C) A decrease in an unearned revenue account. 
D) A decrease in a revenue account. 
E) A decrease in a capital account. 
A) An increase in an expense account. 
B) A decrease in an asset account. 
C) A decrease in an unearned revenue account. 
D) A decrease in a revenue account. 
E) A decrease in a capital account.

Question 4

Which of the following statements is incorrect?

Accepted Answer

A) Higher financial leverage involves higher risk. 
B) Risk is higher if a company has more liabilities. 
C) Risk is higher if a company has higher assets. 
D) The debt ratio is one measure of financial risk. 
E) Lower financial leverage involves lower risk. 
A) Higher financial leverage involves higher risk. 
B) Risk is higher if a company has more liabilities. 
C) Risk is higher if a company has higher assets. 
D) The debt ratio is one measure of financial risk. 
E) Lower financial leverage involves lower risk.

Question 5

A balance column ledger account is:

Accepted Answer

A) An account entered on the balance sheet. 
B) An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted. 
C) Another name for the withdrawals account. 
D) An account used to record the transfers of assets from a business to its owner. 
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction. 
A) An account entered on the balance sheet. 
B) An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted. 
C) Another name for the withdrawals account. 
D) An account used to record the transfers of assets from a business to its owner. 
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

Question 6

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

Accepted Answer

A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal. 
A) Account balance. 
B) Trial balance. 
C) Ledger. 
D) Chart of accounts. 
E) General Journal.

Question 7

At the beginning of the current year,Taunton Company's total assets were $248,000 and its total liabilities were $175,000.During the year,the company reported total revenues of $93,000,total expenses of $76,000 and owner withdrawals of $5,000.There were no other changes in owner's capital during the year and total assets at the end of the year were $260,000.Taunton Company's debt ratio at the end of the current year is:

Accepted Answer

A) 70.6%. 
B) 67.3%. 
C) 32.7%. 
D) 48.6%. 
E) Cannot be determined from the information provided. 
A) 70.6%. 
B) 67.3%. 
C) 32.7%. 
D) 48.6%. 
E) Cannot be determined from the information provided.

Question 8

The balances for the accounts of Mike's Maintenance Co.for the year ended December 31 are shown below.Each account shown had a normal balance.
   Calculate the correct balance for Cash and prepare a trial balance.

Accepted Answer

The answer of The balances for the accounts of Mike's...

Question 9

Which of the following statements is incorrect?

Accepted Answer

A) The normal balance of accounts receivable is a debit. 
B) The normal balance of owner's withdrawals is a debit. 
C) The normal balance of unearned revenues is a credit. 
D) The normal balance of an expense account is a credit. 
E) The normal balance of the owner's capital account is a credit. 
A) The normal balance of accounts receivable is a debit. 
B) The normal balance of owner's withdrawals is a debit. 
C) The normal balance of unearned revenues is a credit. 
D) The normal balance of an expense account is a credit. 
E) The normal balance of the owner's capital account is a credit.

Question 10

James Haley owned a sailboat and was tired of his current job.He decided to open a business that provides day sails to tourists in his hometown.Prepare journal entries to record the following transactions.

Accepted Answer

The answer of James Haley owned a sailboat and was...

Question 11

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

Accepted Answer

A) Withdrawals account. 
B) Capital account. 
C) Drawing account. 
D) T-account. 
E) Balance column sheet. 
A) Withdrawals account. 
B) Capital account. 
C) Drawing account. 
D) T-account. 
E) Balance column sheet.

Question 12

If Tim Jones,the owner of Jones Hardware proprietorship,uses cash of the business to purchase a family automobile,the business should record this use of cash with an entry to:

Accepted Answer

A) Debit Salary Expense and credit Cash. 
B) Debit Tim Jones, Salary and credit Cash. 
C) Debit Cash and credit Tim Jones, Withdrawals. 
D) Debit Tim Jones, Withdrawals and credit Cash. 
E) Debit Automobiles and credit Cash. 
A) Debit Salary Expense and credit Cash. 
B) Debit Tim Jones, Salary and credit Cash. 
C) Debit Cash and credit Tim Jones, Withdrawals. 
D) Debit Tim Jones, Withdrawals and credit Cash. 
E) Debit Automobiles and credit Cash.

Question 13

Flora Accounting Services completed these transactions in February:
a.Purchased office supplies on account,$300.
b.Completed work for a client on credit,$500.
c.Paid cash for the office supplies purchased in (a).
d.Completed work for a client and received $800 cash.
e.Received $500 cash for the work described in (b).
f.Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions.Explanations are not necessary.

Accepted Answer

The answer of Flora Accounting Services completed these transactions in...

Question 14

A company had the following accounts and balances year-end:
  If all of the accounts have normal balances,what are the totals for the trial balance?

Accepted Answer

A) $ 45,200. 
B) $ 67,000. 
C) $104,800. 
D) $209,600. 
E) $186,600. 
A) $ 45,200. 
B) $ 67,000. 
C) $104,800. 
D) $209,600. 
E) $186,600.

Question 15

List the steps in processing transactions.

Accepted Answer

Business transactions and events are the

Question 16

Withdrawals by the owner are a business expense.

Accepted Answer

A) True 
 B)False

Question 17

Both U.S.GAAP and IFRS prepare the same four basic financial statements.

Accepted Answer

A) True 
 B)False

Question 18

Which financial statement reports an organization's financial position at a point in time?

Accepted Answer

A) Income statement. 
B) Balance sheet. 
C) Statement of owner's equity. 
D) Cash flow statement. 
E) Trial balance. 
A) Income statement. 
B) Balance sheet. 
C) Statement of owner's equity. 
D) Cash flow statement. 
E) Trial balance.

Question 19

An account balance is:

Accepted Answer

A) The total of the credit side of the account. 
B) The total of the debit side of the account. 
C) The difference between the total debits and total credits for an account including the beginning balance. 
D) Assets = liabilities + equity. 
E) Always a credit. 
A) The total of the credit side of the account. 
B) The total of the debit side of the account. 
C) The difference between the total debits and total credits for an account including the beginning balance. 
D) Assets = liabilities + equity. 
E) Always a credit.

Question 20

Describe source documents and their purpose.

Accepted Answer

Source documents are the sources of info

Exam 2: Analyzing and Recording Transactions

The higher a company's debt ratio is,the higher the risk of a company not being able to meet its obligations.

A customer's promise to pay is called an account payable to the seller.

A credit is used to record:

Which of the following statements is incorrect?

A balance column ledger account is:

A report that lists accounts and their balances,in which the total debit balances should equal the total credit balances,is called a(n):

The balances for the accounts of Mike's Maintenance Co.for the year ended December 31 are shown below.Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

Which of the following statements is incorrect?

James Haley owned a sailboat and was tired of his current job.He decided to open a business that provides day sails to tourists in his hometown.Prepare journal entries to record the following transactions.

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

If Tim Jones,the owner of Jones Hardware proprietorship,uses cash of the business to purchase a family automobile,the business should record this use of cash with an entry to:

A company had the following accounts and balances year-end: If all of the accounts have normal balances,what are the totals for the trial balance?

List the steps in processing transactions.

Withdrawals by the owner are a business expense.

Both U.S.GAAP and IFRS prepare the same four basic financial statements.

Which financial statement reports an organization's financial position at a point in time?

An account balance is:

Describe source documents and their purpose.

Accounting in Business

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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