Exam 15: Analyzing for Business Transactions

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

What is a trial balance? What is its purpose?

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

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

You increase the Service Revenue account on the ________side of its account.

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Unearned revenues are generally:

Joel Consulting received $3,000 from a customer for services provided. Joel's general journal entry to record this transaction will be:

A company's ledger is:

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. Account Title Account Type Normal Balance (Debit or Credit) a. Prepaid Insurance b. Accounts Payable c. Common Stock d. Utilities Expense e. Land f. Services Revenue g. Notes Receivable h. Advertising Expense i. Unearned Revenue j. Service Revenue

The right side of an account is called the debit side.

For each of the accounts in the following table (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. Account Type Normal Balance a. Wages Expense b. Accounts Receivable c. CommissionsEarned d. Salaries Payable f. Common Stock g. Salaries Expense h. Magazine Subscription Revenue Dividends

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year $114,000 $68,000 End of the year 135,000 73,000 If stockholders invested an additional $12,000 in the business in exchange for common stock and $5,000 of dividends were paid during the year, what was the amount of net income earned by Jerry's Butcher Shop?

Given each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error. a. $100 debit to Cash was debited to the Cash account twice. b. $1,900 credit to Sales was posted as a $190 credit. c. $5,000 debit to Office Equipment was debited to Office Supplies. d. $625 debit to Prepaid Insurance was posted as a $62.50 debit. e. $520 credit to Accounts Payable was not posted. Amount Out Column Having Error of Balance Larger Total a. ________ ________ b. ________ ________ c. ________ ________ d. ________ ________ e. ________ ________

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the ________.

Unearned revenue is classified as a(an) ________ on a business's balance sheet.

The purchase of land and buildings will generally be recorded in the same ledger account.

The balances for the accounts of Milo's Management Co. for the year ended December 31 are shown below. Each account shown had a normal balance. Accounts Payable \ldots\ldots \ 6,500 Accounts Receivable... 7,000 Cash \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots ? Office Supplies. 1,200 Building 125,000 Supplies Expense ............ 21,500 Common Stock..... 118,700 Management Revenue. 175,000 Wages Expense ....... 36,000 Rent Expense ..... 6,000 Land . 50,000 Unearned Management Fee, 4,000 Dividends 48,000