Question 1

A business collects cash from a customer on settlement of accounts receivable. Which of the following accounts will be debited?

Accepted Answer

A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Accounts Payable 
A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Accounts Payable

Question 2

A business borrows cash by signing a note payable. Which of the following accounts will be debited?

Accepted Answer

A) Notes Payable 
B) Accounts Payable 
C) Bank 
D) Cash 
A) Notes Payable 
B) Accounts Payable 
C) Bank 
D) Cash

Question 3

Mitchell Florists had the following total assets, liabilities, and equity as of December 31.   What is Mitchell's debt ratio as of December 31?

Accepted Answer

A) 30% 
B) 70% 
C) 100% 
D) 43% 
A) 30% 
B) 70% 
C) 100% 
D) 43%

Question 4

Which of the following factors is assessed using the debt ratio?

Accepted Answer

A) expenses 
B) revenues 
C) risk 
D) income 
A) expenses 
B) revenues 
C) risk 
D) income

Question 5

A business collects cash from a customer on settlement of accounts receivable. Which of the following accounts will be credited?

Accepted Answer

A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Accounts Payable 
A) Cash 
B) Accounts Receivable 
C) Service Revenue 
D) Accounts Payable

Question 6

The trial balance summarizes the balances of assets, liabilities, and equity.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following journal entries would be recorded if a business makes a cash payment to a supplier of $750 on account (the business had purchased office supplies on account in the previous month)?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 8

A business makes a payment in cash for advertising expense. Which of the following accounts will be credited?

Accepted Answer

A) Notes Payable 
B) Accounts receivable 
C) Cash 
D) Advertising expense 
A) Notes Payable 
B) Accounts receivable 
C) Cash 
D) Advertising expense

Question 9

Which of the following is the correct formula to calculate the debt ratio?

Accepted Answer

A) Debt ratio = Total liabilities × Total assets 
B) Debt ratio = Total liabilities + Total assets 
C) Debt ratio = Total liabilities - Total assets 
D) Debt ratio = Total liabilities ÷ Total assets 
A) Debt ratio = Total liabilities × Total assets 
B) Debt ratio = Total liabilities + Total assets 
C) Debt ratio = Total liabilities - Total assets 
D) Debt ratio = Total liabilities ÷ Total assets

Question 10

A business purchased $3,500 of office supplies for cash. Which of the following sets of ledger accounts reflect the posting of this transaction?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 11

Which of the following statements is true of expenses?

Accepted Answer

A) Expenses increase owner's equity, so an expense account's normal balance is a credit balance. 
B) Expenses decrease owner's equity, so an expense account's normal balance is a credit balance. 
C) Expenses increase owner's equity, so an expense account's normal balance is a debit balance. 
D) Expenses decrease owner's equity, so an expense account's normal balance is a debit balance. 
A) Expenses increase owner's equity, so an expense account's normal balance is a credit balance. 
B) Expenses decrease owner's equity, so an expense account's normal balance is a credit balance. 
C) Expenses increase owner's equity, so an expense account's normal balance is a debit balance. 
D) Expenses decrease owner's equity, so an expense account's normal balance is a debit balance.

Question 12

The trial balance is an internal document used only by employees of the company.

Accepted Answer

A) True 
 B)False

Question 13

Sandra invests $40,000 in her new business by depositing the cash in the business's bank account. Which of the following accounts will be debited?

Accepted Answer

A) Accounts Receivable 
B) Cash 
C) Sandra, Capital 
D) Accounts Payable 
A) Accounts Receivable 
B) Cash 
C) Sandra, Capital 
D) Accounts Payable

Question 14

A business has the following transactions: The business is started by receiving $25,000 from the owner. The business purchased $700 of office supplies on account and $2,500 of furniture on account. The business rendered services to various clients totaling $10,000 on account. It paid $5,000 as salaries expense and $6,000 as rent expense. It paid $1,000 to a supplier for the office supplies purchased earlier. It collected $3,000 from one of its clients for services rendered earlier in the month. At the end of the month, all journal entries are posted to the ledger. The Accounts Payable account will appear as:

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 15

A payable involves a future receipt of cash.

Accepted Answer

A) True 
 B)False

Question 16

A business paid salaries of $6,000 in cash. Provide the journal entry (debits first, credits second.)

Accepted Answer

The answer of A business paid salaries of $6,000 in...

Question 17

A payment of an expense in advance is called a prepaid expense.

Accepted Answer

A) True 
 B)False

Question 18

Grace Company has a debt ratio of 25%; this means that 75% of the assets are financed by creditors of the corporation.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is an asset account?

Accepted Answer

A) Salaries Expense 
B) Accounts Payable 
C) Service Revenue 
D) Prepaid Expense 
A) Salaries Expense 
B) Accounts Payable 
C) Service Revenue 
D) Prepaid Expense

Question 20

The following are the current month's balances for Toys Galore, before preparing the trial balance.   What amount should be shown for Jones, Capital on the trial balance?

Accepted Answer

A) $16,500 
B) $8,250 
C) $14,500 
D) $31,000 
A) $16,500 
B) $8,250 
C) $14,500 
D) $31,000

Exam 2: Recording Business Transactions

A business collects cash from a customer on settlement of accounts receivable. Which of the following accounts will be debited?

A business borrows cash by signing a note payable. Which of the following accounts will be debited?

Mitchell Florists had the following total assets, liabilities, and equity as of December 31. What is Mitchell's debt ratio as of December 31?

Which of the following factors is assessed using the debt ratio?

A business collects cash from a customer on settlement of accounts receivable. Which of the following accounts will be credited?

The trial balance summarizes the balances of assets, liabilities, and equity.

Which of the following journal entries would be recorded if a business makes a cash payment to a supplier of $750 on account (the business had purchased office supplies on account in the previous month)?

A business makes a payment in cash for advertising expense. Which of the following accounts will be credited?

Which of the following is the correct formula to calculate the debt ratio?

A business purchased $3,500 of office supplies for cash. Which of the following sets of ledger accounts reflect the posting of this transaction?

Which of the following statements is true of expenses?

The trial balance is an internal document used only by employees of the company.

Sandra invests $40,000 in her new business by depositing the cash in the business's bank account. Which of the following accounts will be debited?

A payable involves a future receipt of cash.

A business paid salaries of $6,000 in cash. Provide the journal entry (debits first, credits second.)

A payment of an expense in advance is called a prepaid expense.

Grace Company has a debt ratio of 25%; this means that 75% of the assets are financed by creditors of the corporation.

Which of the following is an asset account?

The following are the current month's balances for Toys Galore, before preparing the trial balance. What amount should be shown for Jones, Capital on the trial balance?

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

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