Exam 3: Processing Accounting Information

Payment is received from customers who were billed earlier for services provided for them.For this transaction,identify the effect on the accounting equation.

Explain the purpose of a trial balance and the limitation of the trial balance.

Which one of the following best defines an external event in terms of accounting?

A purchase of raw materials from a supplier is a(n)____________________ event.

Which of the following statements best describes one effect of recognizing expenses incurred by a business entity?

A(n)____________________ is a chronological record of all transactions entered into by a business.

_______________________ are a distribution of net income for the period,not a reduction of net income as are expenses.

The system of accounting in which there are at least two accounts affected in every transaction so that the accounting equation stays in balance is a(n)

The normal balance of the Dividends account is a credit.

Presented below are a list of source documents and a list of transactions.Using the identification letters before each source document,indicate next to each transaction which source document serves as evidence for the recording of the transaction. ​

Terry Company Transactions Oct. 1 $\quad$ Terry purchased computer equipment for $\$ 8,400$ , paying $\$ 1,000$ now, and issuing a promissory note for the bal ance; the note is due in monthly installments of $\$ 500$ plus interest at $10 \%$ on the unpaid balance. 8 $\quad$ Terry records service revenue earned: $\$ 3,200$ from cash customers; $\$ 12,000$ for customers billed for completed services. 22 $\quad$ Common stock is issued for land with a far value of $\$ 35,000$ . 31 $\quad$ An invoice for $\$ 1,200$ is received from the company's advertising agency for ads that were run on radio and $\mathrm { TV }$ during October; the invoice is due in 30 days. -Refer to the transactions for Terry Company. ? Use the transactions incurred by the Terry Company to set up T accounts and post each transaction to the T accounts.

Your bookkeeper is off for the day and you are trying to figure out what her last entry in the journal could be for.Unfortunately,she only recorded the debit side of the transaction as $4,400 to Accounts Payable.It is possible that this debit could correspond to

The correct term for an entry made to the left side of an account is

There is a universal chart of accounts that is applicable to all businesses.

Every accounting transaction affects both the balance sheet and the income statement.

Prepare the journal entry to record each of the following independent transactions. (Use the number of the transaction in place of a date for identification purposes.) 1. Services provided for cash of $7,050. 2. Purchase of equipment for cash of $2,240. 3. Services provided on account of $530. 4. Purchases of supplies on account for $365. Purchases of supplies on account for $365.

Credit entries are used to

If a company purchases equipment by issuing a note payable,its total assets will not change.

A credit means