Exam 2: Analyzing Business Transactions

Dividends should appear on the balance sheet.

Which of the following statements is true about a journal entry?

Investments by stockholders are recorded in the Common Stock account,not in the Retained Earnings account.

Amalgamated Campus Stores,Inc.(ACS)employed student representatives to market grooming aids,casual clothes,and other such products on college campuses.The representatives organized parties at which they displayed samples of all the products.Students who bought products paid the representative,who in turn ordered the products and paid ACS for them.When the products arrived,the student representatives delivered them to the buyers.The representatives paid ACS less than they charged the buyers.The difference represented the earnings of the representatives,who were not employees of ACS.Wall Street investors admired ACS because the company had enjoyed several years of rapid growth in sales and earnings. Last year,the president of ACS predicted further increases in sales of 30 percent.By December,however,it was apparent that the forecasted sales goals would not be met.So during the last two weeks of December,ACS shipped $23 million of merchandise to the sales representatives to be held for future sales parties.The company billed the student representatives and recorded the shipments as sales.In this way,ACS was able to meet its sales goal for the year. Were these merchandise shipments properly recorded as sales?

When a business pays a new employee for the first time,a recordable transaction has occurred.

Which of the following bookkeeping techniques generally is not acceptable?

Lindsay Company had the following transactions for the month of August. Enter the above transactions in the following T accounts.Determine the cash balance after transactions,the amount still to be received,and the amount still to be paid.

All companies use the same standard set of accounts.

Which of the following accounts is a liability?

One can obtain a clear picture of a company's liquidity by referring to its income statement.

A transaction in which six months' rent is paid in advance results in which of the following journal entries?

Match each definition with the correct term below. -Balance

Posting is performed by transferring information from the

Liabilities are established with debits and eliminated with credits.

Entering transactions into the journal is called posting.

Which of the following statements is false about a journal entry?

The purpose of the ledger is to

When a dividend is declared and paid,the Dividends account is credited and Cash is debited.

Which of the following accounts might be placed first in a journal entry?

A trial balance is normally prepared at the end of each week.