Exam 15: Analyzing for Business Transactions

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was ________.(round to one decimal place)

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

Debit means increase and credit means decrease for all accounts.

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

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

Dividends distributed to stockholders should be treated as an expense of the business.

Explain the difference between a general ledger and a chart of accounts.

The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits.

For each of the following accounts, identify whether a debit or credit yields the indicated change b. To increase Fees Earned b. To decrease Cash c. To decrease Unearned Revenue d. To increase Accounts Receivable e. To increase Common Stock f. To decrease Notes Payable g. To increase Prepaid Rent h. To increase Salaries Expense i. To increase Accounts Payable j. To decrease Prepaid Insurance

An account balance is:

A revenue account normally has a debit balance.

After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window Company discovered the following errors: 1. Cash payment of the $225 telephone bill for December was recorded twice. 2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000. 3. A $900 cash withdrawal by the owner was recorded to the correct accounts as $90. 4. An additional investment of $5,000 cash by the stockholder was recorded as a debit to Common Stock and a credit to Cash. 5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry. Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column. Would the errors cause the trial balance to be out of balance? Error Yes No 1. ________ ________ 2. ________ ________ 3. ________ ________ 4. ________ ________ 5. ________ ________ Would the errors cause the trial balance to be out of balance?

Stockholder investments always decrease equity.

An asset created by prepayment of an insurance premium is:

________ and ________ are the starting points for the analyzing and recording process.

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a

Asset accounts are decreased by debits.

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Wiley Hill opened Hill's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: • Wiley, the sole stockholder, invested $25,000 cash in the business in exchange For common stock. • Wiley contributed $100,000 of equipment to the business in exchange for common stock. • The company paid $2,000 cash to rent office space for the month of March. • The company received $16,000 cash for repair services provided during March. • The company paid $6,200 for salaries for the month of March. • The company provided $3,000 of services to customers on account. • The company paid cash of $500 for utilities for the month of March. • The company received $3,100 cash in advance from a customer for repair services To be provided in April. • The company paid Wiley $5,000 cash as a dividend. Based on this information, total stockholder's equity reported on the balance sheet at the end of March would be: