Question 1

A book holding all of the accounts is called the:

Accepted Answer

A) ledger. 
B) journal. 
C) income statement. 
D) balance sheet. 
A) ledger. 
B) journal. 
C) income statement. 
D) balance sheet. D

Question 2

A business makes a cash payment of $12,000 to a creditor. Which account is debited?

Accepted Answer

A) Cash 
B) Accounts payable 
C) Service revenue 
D) Accounts receivable 
A) Cash 
B) Accounts payable 
C) Service revenue 
D) Accounts receivable B

Question 3

The following entries were made by the accountant of Patel Pastries during its first month of operation: 1. James Patel, the owner, deposited $3,000 in the business's new checking account.
2. Patel Pastries paid the first month's rent of $400 in cash.
3. Patel Pastries purchased equipment by signing a note payable of $11,000.
4. Cash sales for the month were $4,500.
5. Patel Pastries purchased cooking supplies for $1,400 cash.
After the accountant posts these entries to the general ledger, what is the balance in the Cash account?

Accepted Answer

A) $7,500 
B) $7,100 
C) $5,700 
D) $16,700 
A) $7,500 
B) $7,100 
C) $5,700 
D) $16,700 C

Question 4

Which of the following is a method used to detect errors when the two columns of the trial balance are NOT equal?

Accepted Answer

A) Compute the difference in the columns and search the trial balance for a transposition error or a slide error if the difference is evenly divisible by 9. 
B) Compute the difference in the columns, divide the difference between total debits and total credits by 2 and search for a debit shown as a credit, or vice versa. 
C) Compute the difference in the columns and search for a missing account with that balance. 
D) All of the above are suggested methods for detecting errors. 
A) Compute the difference in the columns and search the trial balance for a transposition error or a slide error if the difference is evenly divisible by 9. 
B) Compute the difference in the columns, divide the difference between total debits and total credits by 2 and search for a debit shown as a credit, or vice versa. 
C) Compute the difference in the columns and search for a missing account with that balance. 
D) All of the above are suggested methods for detecting errors.

Question 5

A business has the following transactions: The business is started by receiving $20,000 from the owner. The business purchases $500 of supplies on account. The business purchases $2,000 of furniture on account. The business renders services to various clients totaling $9,000 on account. The business pays out $2,000 for Salary expense and $3,000 for Rent expense. The business pays $500 to supplier for the supplies purchased earlier. The business collects $1,500 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 follows:

Accepted Answer

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

Question 6

Which of the following accounts is an example of an owner's equity account?

Accepted Answer

A) Accounts payable 
B) Equipment 
C) Cash 
D) Drawing 
A) Accounts payable 
B) Equipment 
C) Cash 
D) Drawing

Question 7

A journal entry for a $250 payment to purchase supplies was erroneously recorded as a debit to Supplies for $520 and a credit to Cash for $250. Which of the following statements about the trial balance is TRUE?

Accepted Answer

A) The sum of the credits will exceed the sum of the debits by $270. 
B) The sum of the debits will exceed the sum of the credits by $250. 
C) The sum of the debits will exceed the sum of the credits by $270. 
D) The trial balance will be in balance; the sum of the credits will equal the sum of the debits. 
A) The sum of the credits will exceed the sum of the debits by $270. 
B) The sum of the debits will exceed the sum of the credits by $250. 
C) The sum of the debits will exceed the sum of the credits by $270. 
D) The trial balance will be in balance; the sum of the credits will equal the sum of the debits.

Question 8

A business repays the amount borrowed on a note payable. Which account is debited?

Accepted Answer

A) Cash 
B) Equipment 
C) Notes payable 
D) Notes receivable 
A) Cash 
B) Equipment 
C) Notes payable 
D) Notes receivable

Question 9

A trial balance is a list of all of the accounts with their balances.

Accepted Answer

A) True 
 B)False

Question 10

After initially recording a transaction, the data is then copied, or posted, to the:

Accepted Answer

A) chart of accounts. 
B) ledger. 
C) trial balance. 
D) journal. 
A) chart of accounts. 
B) ledger. 
C) trial balance. 
D) journal.

Question 11

Thermo HVAC is a heating and air conditioning service business. On December 31, 2010, after its first month of business, Thermo HVAC had the following balances in its accounts, listed alphabetically.
   Determine the balance in the cash account and prepare a trial balance using proper format.

Accepted Answer

The answer of Thermo HVAC is a heating and air...

Question 12

Which of the following groups of accounts BOTH normally have a credit balance?

Accepted Answer

A) Assets and Expenses 
B) Revenues and Expenses 
C) Liabilities and Owner's equity 
D) Assets and Liabilities 
A) Assets and Expenses 
B) Revenues and Expenses 
C) Liabilities and Owner's equity 
D) Assets and Liabilities

Question 13

A business purchases equipment by paying $8,000 in cash and issuing a note payable of $12,000. Which of the following journal entries would be recorded?

Accepted Answer

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

Question 14

The following are the ending month's balances for Toys Galore.   What would be the last account listed on the trial balance for Toys Galore?

Accepted Answer

A) Revenue 
B) Expenses 
C) Cash 
D) Accounts payable 
A) Revenue 
B) Expenses 
C) Cash 
D) Accounts payable

Question 15

A business has the following transactions: The business is started by receiving $20,000 from the owner. The business purchases $500 of supplies on account. The business purchases $2,000 of furniture on account. The business renders services to various clients totaling $9,000 on account. The business pays out $2,000 for Salary expense and $3,000 for Rent expense. The business pays $500 to a supplier for the supplies purchased earlier. The business collects $1,500 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 Cash account will appear as follows:

Accepted Answer

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

Question 16

For Cash, the category of account and its normal balance are:

Accepted Answer

A) Assets and a debit balance. 
B) Liabilities and a credit balance. 
C) Owner's equity and a credit balance. 
D) Assets and a credit balance. 
A) Assets and a debit balance. 
B) Liabilities and a credit balance. 
C) Owner's equity and a credit balance. 
D) Assets and a credit balance.

Question 17

A business buys $500 of supplies on account. Which account is debited?

Accepted Answer

A) Cash 
B) Accounts payable 
C) Supplies 
D) Service revenue 
A) Cash 
B) Accounts payable 
C) Supplies 
D) Service revenue

Question 18

Which of the following statements is FALSE?

Accepted Answer

A) A trial balance shows total debits and total credits. 
B) A trial balance presents data in debit and credit format, but a balance sheet does not. 
C) A trial balance shows total amounts for assets, liabilities, and equity. 
D) A trial balance is created before the balance sheet is prepared. 
A) A trial balance shows total debits and total credits. 
B) A trial balance presents data in debit and credit format, but a balance sheet does not. 
C) A trial balance shows total amounts for assets, liabilities, and equity. 
D) A trial balance is created before the balance sheet is prepared.

Question 19

Which of the following groups of accounts BOTH normally have a debit balance?

Accepted Answer

A) Assets and Expenses 
B) Revenues and Expenses 
C) Liabilities and Owner's equity 
D) Assets and Liabilities 
A) Assets and Expenses 
B) Revenues and Expenses 
C) Liabilities and Owner's equity 
D) Assets and Liabilities

Question 20

The last step before preparing financial statements is to:

Accepted Answer

A) post all entries. 
B) record all transactions in the journal. 
C) prepare the trial balance. 
D) review source documents. 
A) post all entries. 
B) record all transactions in the journal. 
C) prepare the trial balance. 
D) review source documents.

Exam 2: Recording Business Transactions

A book holding all of the accounts is called the:

A business makes a cash payment of $12,000 to a creditor. Which account is debited?

Which of the following is a method used to detect errors when the two columns of the trial balance are NOT equal?

Which of the following accounts is an example of an owner's equity account?

A journal entry for a $250 payment to purchase supplies was erroneously recorded as a debit to Supplies for $520 and a credit to Cash for $250. Which of the following statements about the trial balance is TRUE?

A business repays the amount borrowed on a note payable. Which account is debited?

A trial balance is a list of all of the accounts with their balances.

After initially recording a transaction, the data is then copied, or posted, to the:

Thermo HVAC is a heating and air conditioning service business. On December 31, 2010, after its first month of business, Thermo HVAC had the following balances in its accounts, listed alphabetically. Determine the balance in the cash account and prepare a trial balance using proper format.

Which of the following groups of accounts BOTH normally have a credit balance?

A business purchases equipment by paying $8,000 in cash and issuing a note payable of $12,000. Which of the following journal entries would be recorded?

The following are the ending month's balances for Toys Galore. What would be the last account listed on the trial balance for Toys Galore?

For Cash, the category of account and its normal balance are:

A business buys $500 of supplies on account. Which account is debited?

Which of the following statements is FALSE?

Which of the following groups of accounts BOTH normally have a debit balance?

The last step before preparing financial statements is to:

Accounting and the Business Environment

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Plant Assets and Intangibles

Current Liabilities and Payroll

Long-Term Liabilities, Bonds Payable, and Classification of Liabilities on the Balance Sheet

Corporations: Paid-In Capital and the Balance Sheet

Corporations: Effects on Retained Earnings and the Income Statement

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Management Accounting

Job Order and Process Costing

Activity-Based Costing and Other Cost Management Tools

Cost-Volume-Profit Analysis

Short-Term Business Decisions

Capital Investment Decisions and the Time Value of Money

The Master Budget and Responsibility Accounting

Flexible Budgets and Standard Costs

Performance Evaluation and the Balanced Scorecard

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