Question 1

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.

Question 2

A business renders services for $26,000 and collects cash from the customer. Which of the following accounts will be debited?

Accepted Answer

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

Question 3

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 4

A business renders services to a customer for $26,000 on account. Which of the following accounts will be credited?

Accepted Answer

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

Question 5

A customer's promise to pay in the future for services or goods sold is called a(n):

Accepted Answer

A)  Accounts Receivable. 
B)  Accounts Payable. 
C)  Unearned Revenue. 
D)  Notes Payable. 
A)  Accounts Receivable. 
B)  Accounts Payable. 
C)  Unearned Revenue. 
D)  Notes Payable.

Question 6

A business purchased land for $250,000 cash. Provide the journal entry (debits first, credits second.)

Accepted Answer

Purchased

Question 7

After initially recording a transaction, the data is then transferred 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 8

The trial balance is also known as the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

The following are the current month's balances for Toys Galore: $$\begin{array} { | l | r | } 
\hline \text { Accounts Payable } & \$ 8,000 \
\hline \text { Revenue } & 10,000 \
\hline \text { Cash } & 5,000 \
\hline \text { Expenses } & 1,750 \
\hline \text { Fumiture } & 12,000 \
\hline \text { Accounts Receivable } & 14,000 \
\hline \text { Tones, Capital } & 8,250 \
\hline \text { Notes Payable } & 6,500 \
\hline
\end{array}$$ What is the net income for Toys Galore for the current month?

Accepted Answer

A)  $10,000 
B)  $8,250 
C)  $11,750 
D)  $15,000 
A)  $10,000 
B)  $8,250 
C)  $11,750 
D)  $15,000

Question 10

Which of the following is a liability account?

Accepted Answer

A)  Accounts Receivable 
B)  Cash 
C)  Building 
D)  Notes Payable 
A)  Accounts Receivable 
B)  Cash 
C)  Building 
D)  Notes Payable

Question 11

Which of the following accounts decreases with a debit?

Accepted Answer

A)  Accounts Receivable 
B)  Notes Payable 
C)  Cash 
D)  Land 
A)  Accounts Receivable 
B)  Notes Payable 
C)  Cash 
D)  Land

Question 12

A trial balance summarizes a ledger by listing all the accounts with their balances at a point in time.

Accepted Answer

A) True 
 B)False

Question 13

The Accounts Receivable account is a(n) ________ account and carries a ________ normal balance.

Accepted Answer

A)  liability; debit 
B)  asset; debit 
C)  liability; credit 
D)  asset; credit 
A)  liability; debit 
B)  asset; debit 
C)  liability; credit 
D)  asset; credit

Question 14

A business buys $500 of Office Supplies on account. Which of the following accounts is debited?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Office Supplies 
D)  Utilities Expense 
A)  Cash 
B)  Accounts Payable 
C)  Office Supplies 
D)  Utilities Expense

Question 15

The Accounts Receivable account of Nuptials Inc. is shown below.   Calculate the ending balance of the account.

Accepted Answer

A)  $33,500, debit 
B)  $31,000, debit 
C)  $3,500, credit 
D)  $27,500, debit 
A)  $33,500, debit 
B)  $31,000, debit 
C)  $3,500, credit 
D)  $27,500, debit

Question 16

All asset accounts and equity accounts increase with a debit.

Accepted Answer

A) True 
 B)False

Question 17

An accounts receivable requires the business to pay cash in future.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following sequences is the normal sequence of flow of accounting data?

Accepted Answer

A)  Ledger → Journal → Source document 
B)  Journal → Source document → Ledger 
C)  Source document → Journal → Ledger 
D)  Source document → Ledger → Journal 
A)  Ledger → Journal → Source document 
B)  Journal → Source document → Ledger 
C)  Source document → Journal → Ledger 
D)  Source document → Ledger → Journal

Question 19

A posting reference column is added:

Accepted Answer

A)  while preparing the trial balance using the ledger. 
B)  when the information is transferred from the journal to the ledger. 
C)  when the information is transferred from the ledger to the journal. 
D)  while preparing the balance sheet using the trial balance. 
A)  while preparing the trial balance using the ledger. 
B)  when the information is transferred from the journal to the ledger. 
C)  when the information is transferred from the ledger to the journal. 
D)  while preparing the balance sheet using the trial balance.

Question 20

Data from a trial balance is used to prepare the three basic financial statements.

Accepted Answer

A) True 
 B)False

Exam 2: Recording Business Transactions

The last step before preparing financial statements is to:

A business renders services for $26,000 and collects cash from the customer. Which of the following accounts will be debited?

Which of the following statements is true of expenses?

A business renders services to a customer for $26,000 on account. Which of the following accounts will be credited?

A customer's promise to pay in the future for services or goods sold is called a(n):

A business purchased land for $250,000 cash. Provide the journal entry (debits first, credits second.)

After initially recording a transaction, the data is then transferred to the:

The trial balance is also known as the balance sheet.

The following are the current month's balances for Toys Galore: Accounts Payable \ 8,000 Revenue 10,000 Cash 5,000 Expenses 1,750 Fumiture 12,000 Accounts Receivable 14,000 Tones, Capital 8,250 Notes Payable 6,500 What is the net income for Toys Galore for the current month?

Which of the following is a liability account?

Which of the following accounts decreases with a debit?

A trial balance summarizes a ledger by listing all the accounts with their balances at a point in time.

The Accounts Receivable account is a(n) ________ account and carries a ________ normal balance.

A business buys $500 of Office Supplies on account. Which of the following accounts is debited?

The Accounts Receivable account of Nuptials Inc. is shown below. Calculate the ending balance of the account.

All asset accounts and equity accounts increase with a debit.

An accounts receivable requires the business to pay cash in future.

Which of the following sequences is the normal sequence of flow of accounting data?

A posting reference column is added:

Data from a trial balance is used to prepare the three basic financial statements.

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

Filters

The Accounts Receivable account is a(n) account and carries a normal balance.