Exam 2: Recording Business Transactions

The accounting process of copying of amounts from the journal to the appropriate ledger accounts is referred to as:

A balance sheet is organized in order of the accounting equation, with liabilities first, followed by assets and shareholders' equity.

Prepare a trial balance for Salty Inc. dated June 30, 2014, based on the following transactions that occurred during the month of June. a. Owner invested $25,000 cash into the business and received common shares in return. b. Rented an office and paid one month's rent, $900. c. Purchased $400 of supplies on account. d. Performed services on account, $5,500. e. Paid $2,000 cash for office furniture. f. Owner received a dividend of $700. g. Collected $1,200 on account.

Slick Corporation has summarized financial statements as shown below. Fill in the blank areas to complete the financial statements. Begin in 2012 and move forward from there.

The purchase of a building with a down payment of cash and the signing of a note payable for the remainder would include a debit to both the asset Building, and a credit to the asset Cash and the liability Note Payable.

Credits to revenue accounts ultimately result in:

Place a checkmark in the appropriate column to show whether the event is recorded as a debit or a credit.

When a company purchases inventory on account (that is, on credit), which type of account is credited to record the transaction?

Dividends paid to the shareholders when declared will:

A ledger is the first place where transactions are recorded in the accounting system.

Following is a list of errors made during the posting process. Indicate the exact dollar impact each error would have on total assets, total liabilities, and shareholders' equity. Complete the chart below by using (+) to indicate overstated, (-) to indicate understated, and (0) to indicate no effect. Transaction (a) is completed as an example. a. A $200 credit to the Accounts Payable account was posted as $2,000. b. A $50 debit to Cash was never posted. c. A $550 credit to the Revenue account was credited to the Accounts Receivable account. d. A $45,000 debit to the Land account was debited to an expense account. e. A $200 payment on an account payable was credited to Accounts Receivable instead of Cash. f. A $350 debit to the Dividends account was posted as $530. b. c. d. e. f.

The normal balance of the Common Shares account is a ________ because it increases ________.

A chart of accounts is:

A trial balance that is "in balance" proves:

Which type of account is credited when a company records a debt?

When the trial balance is out of balance due to a transposition error, the difference between total debits and total credits will be evenly divisible by 9.

The payment for rent of the office building for one month would include a:

Notes Payable is a typical example of a liability account.

A trial balance has all of the following features listed below except:

The trial balance is the starting point for preparing the organization's financial statements.