Question 1

Preparation of a trial balance is the first step in processing a financial transaction.

Accepted Answer

A) True 
 B)False

Question 2

A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this collection of cash?

Accepted Answer

A) Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800. 
B) Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800. 
C) Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800. 
D) Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800. 
E) Debit Cash,$1,800; credit Accounts Receivable,$1,800. 
A) Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800. 
B) Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800. 
C) Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800. 
D) Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800. 
E) Debit Cash,$1,800; credit Accounts Receivable,$1,800.

Question 3

Expenses always decrease equity.

Accepted Answer

A) True 
 B)False

Question 4

The right side of a T-account is a(n):

Accepted Answer

A) Debit. 
B) Increase. 
C) Credit. 
D) Decrease. 
E) Account balance. 
A) Debit. 
B) Increase. 
C) Credit. 
D) Decrease. 
E) Account balance.

Question 5

The balance column in a ledger account is:

Accepted Answer

A) An account entered on the balance sheet. 
B) A column for showing the balance of the account after each entry is posted. 
C) Another name for the dividends account. 
D) An account used to record the transfers of assets from a business to its stockholders. 
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction. 
A) An account entered on the balance sheet. 
B) A column for showing the balance of the account after each entry is posted. 
C) Another name for the dividends account. 
D) An account used to record the transfers of assets from a business to its stockholders. 
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

Question 6

If the Common stock account had a $10,000 credit balance at the beginning of the period,and during the period,an additional $5,000 of common stock is issued,the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) $133,400. 
B) $130,300. 
C) $125,300. 
D) $8,400. 
E) $13,500. 
A) $133,400. 
B) $130,300. 
C) $125,300. 
D) $8,400. 
E) $13,500.

Question 8

If Tyrol Willow,the sole stockholder of Willow Hardware,withdraws cash of the business to purchase a family car,the business should record this use of cash with an entry to:

Accepted Answer

A) Debit Accounts Payable and credit Cash. 
B) Debit Cash and credit Salary Expense. 
C) Debit Cash and credit Dividends. 
D) Debit Dividends and credit Cash. 
E) Debit Cash and credit Cash. 
A) Debit Accounts Payable and credit Cash. 
B) Debit Cash and credit Salary Expense. 
C) Debit Cash and credit Dividends. 
D) Debit Dividends and credit Cash. 
E) Debit Cash and credit Cash.

Question 9

Asset accounts are decreased by debits.

Accepted Answer

A) True 
 B)False

Question 10

A company's list of accounts and the identification numbers assigned to each account is called a:

Accepted Answer

A) Source document. 
B) Journal. 
C) Trial balance. 
D) Chart of accounts. 
E) General Journal. 
A) Source document. 
B) Journal. 
C) Trial balance. 
D) Chart of accounts. 
E) General Journal.

Question 11

Identify the statement below that is correct.

Accepted Answer

A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable. 
A) When a future expense is paid in advance,the payment is normally recorded in a liability account called Prepaid Expense. 
B) Promises of future payment by the customer are called accounts receivable. 
C) Increases and decreases in cash are always recorded in the common stock account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Accrued liabilities include accounts receivable.

Question 12

Identify the account below that is classified as an asset in a company's chart of accounts:

Accepted Answer

A) Accounts Receivable 
B) Accounts Payable 
C) Common Stock 
D) Unearned Revenue 
E) Service Revenue 
A) Accounts Receivable 
B) Accounts Payable 
C) Common Stock 
D) Unearned Revenue 
E) Service Revenue

Question 13

The third step in the analyzing and recording process is to record each transaction chronologically in a________.

Accepted Answer

The answer of The third step in the analyzing and...

Question 14

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

Accepted Answer

A) True 
 B)False

Question 15

A company had total assets of $350,000,total liabilities of $101,500,and total equity of $248,500.Calculate the company's debt ratio.

Accepted Answer

Debt Ratio = Total L

Question 16

A company's written promise to pay (in the form of a promissory note)a future amount is a(n):

Accepted Answer

A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable. 
A) Unearned revenue. 
B) Prepaid expense. 
C) Credit account. 
D) Note payable. 
E) Account receivable.

Question 17

The amount of net income is added on the statement of retained earnings.

Accepted Answer

A) True 
 B)False

Question 18

Specter Consulting purchased $7,000 of supplies and paid cash immediately.Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

Accepted Answer

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

Question 19

Sarah's Paralegal Services completed these transactions in February:
a.Purchased office supplies on account,$300.
b.Completed work for a client on credit,$500.
c.Paid cash for the office supplies purchased in (a).
d.Completed work for a client and received $800 cash.
e.Received $500 cash for the work described in (b).
f.Received $1,000 in advance from a client for services to be performed in March.
Prepare journal entries to record the above transactions.Explanations are not necessary.

Accepted Answer

The answer of Sarah's Paralegal Services completed these transactions in...

Question 20

The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0.Based on this information,an investor can conclude:

Accepted Answer

A) Kemp finances a relatively lower portion of its assets with liabilities than Braun. 
B) Kemp has less financial leverage. 
C) Braun has higher financial leverage. 
D) Kemp has the exact same dollar amount of total liabilities and total assets. 
E) Braun has less equity per dollar of assets than Kemp. 
A) Kemp finances a relatively lower portion of its assets with liabilities than Braun. 
B) Kemp has less financial leverage. 
C) Braun has higher financial leverage. 
D) Kemp has the exact same dollar amount of total liabilities and total assets. 
E) Braun has less equity per dollar of assets than Kemp.

Exam 2: Accounting for Business Transactions

Preparation of a trial balance is the first step in processing a financial transaction.

A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this collection of cash?

Expenses always decrease equity.

The right side of a T-account is a(n):

The balance column in a ledger account is:

If the Common stock account had a $10,000 credit balance at the beginning of the period,and during the period,an additional $5,000 of common stock is issued,the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.

If Tyrol Willow,the sole stockholder of Willow Hardware,withdraws cash of the business to purchase a family car,the business should record this use of cash with an entry to:

Asset accounts are decreased by debits.

A company's list of accounts and the identification numbers assigned to each account is called a:

Identify the statement below that is correct.

Identify the account below that is classified as an asset in a company's chart of accounts:

The third step in the analyzing and recording process is to record each transaction chronologically in a________.

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

A company had total assets of $350,000,total liabilities of $101,500,and total equity of $248,500.Calculate the company's debt ratio.

A company's written promise to pay (in the form of a promissory note)a future amount is a(n):

The amount of net income is added on the statement of retained earnings.

Specter Consulting purchased $7,000 of supplies and paid cash immediately.Which of the following general journal entries will Specter Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0.Based on this information,an investor can conclude:

Accounting in Business

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Long-Term Assets

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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