Question 1

Which of the following is classified as an asset account?

Accepted Answer

A)  Prepaid Insurance 
B)  Notes Payable 
C)  Owner, Withdrawals 
D)  Unearned Revenue 
A)  Prepaid Insurance 
B)  Notes Payable 
C)  Owner, Withdrawals 
D)  Unearned Revenue

Question 2

Debit refers to the right side of the T-account,and credit refers to the left side.

Accepted Answer

A) True 
 B)False

Question 3

The Salaries Payable account is a(n)________.

Accepted Answer

A)  liability account with a normal debit balance 
B)  asset account with a normal debit balance 
C)  liability account with a normal credit balance 
D)  asset account with a normal credit balance 
A)  liability account with a normal debit balance 
B)  asset account with a normal debit balance 
C)  liability account with a normal credit balance 
D)  asset account with a normal credit balance

Question 4

The process of transferring data from the ledger to the journal is called posting.

Accepted Answer

A) True 
 B)False

Question 5

For Office Supplies,the category of account and its normal balance is ________.

Accepted Answer

A)  liabilities and a debit balance 
B)  assets and a debit balance 
C)  liabilities and a credit balance 
D)  assets and a credit balance 
A)  liabilities and a debit balance 
B)  assets and a debit balance 
C)  liabilities and a credit balance 
D)  assets and a credit balance

Question 6

In a trial balance,total debits must always equal total credits.

Accepted Answer

A) True 
 B)False

Question 7

A business makes a payment of $1,400 on a note payable.Which of the following journal entries would be recorded?

Accepted Answer

A)  Cash is credited and Notes Payable is debited for $1,400. 
B)  Notes Payable is credited and Cash is debited for $1,400. 
C)  Cash is credited and Financing Expense is debited for $1,400. 
D)  Cash is debited and Financing Revenue is credited for $1,400. 
A)  Cash is credited and Notes Payable is debited for $1,400. 
B)  Notes Payable is credited and Cash is debited for $1,400. 
C)  Cash is credited and Financing Expense is debited for $1,400. 
D)  Cash is debited and Financing Revenue is credited for $1,400.

Question 8

A business purchases $3,500 of office supplies for cash.Which of the following sets of ledger accounts reflects the posting of this transaction?

Accepted Answer

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

Question 9

Jackson Enterprises is a new company organized as a sole proprietorship.The following transactions occurred during the first month of business.
a)Received $15,000 cash from the owner,Marjorie Johnson,in exchange for capital.
b)Paid the first month's rent with $800 cash.
c)Purchased equipment by paying $4,000 cash and executing a note payable for $4,000.
d)Purchased office supplies for $200 cash.The supplies remain at the end of the month.
e)Billed clients for a total of $7,000 for design services rendered.
f)Received $1,000 cash from clients for services rendered above.
Required:
1.Prepare journal entries and post the journal entries to T-accounts.
2.Prepare a trial balance at the end of the first month using the above transactions.

Accepted Answer

None

Question 10

A business borrows cash by signing a note payable.Which of the following accounts is credited?

Accepted Answer

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

Question 11

Which is a TRUE statement regarding the accounting equation?

Accepted Answer

A)  The equation can be stated as assets minus liabilities equals equity. 
B)  The equation consists of three parts: assets, liabilities, and net income. 
C)  The equation is an optional tool for accountants to use. 
D)  The equation does not need to balance during a specific period. 
A)  The equation can be stated as assets minus liabilities equals equity. 
B)  The equation consists of three parts: assets, liabilities, and net income. 
C)  The equation is an optional tool for accountants to use. 
D)  The equation does not need to balance during a specific period.

Question 12

Adams Company recorded the following journal entry on March 2,2018. $\begin{array}{|l|r|r|}
\hline\text { Cash } & 8,500 \
\hline \text { Unearned Revenue } & & 8,500 \
\hline
\end{array}$
 From the journal entry above,identify the transaction on March 2,2018.

Accepted Answer

A)  Adams purchased goods worth $8,500 and signed a one-year note for the same amount. 
B)  Adams sold goods for $8,500 cash. 
C)  Adams received $8,500 for services to be performed in a later period. 
D)  Adams paid $8,500 for services to be received at a later date. 
A)  Adams purchased goods worth $8,500 and signed a one-year note for the same amount. 
B)  Adams sold goods for $8,500 cash. 
C)  Adams received $8,500 for services to be performed in a later period. 
D)  Adams paid $8,500 for services to be received at a later date.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Accounts Receivable is a(n)________ account and has 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 15

A business collects cash from a customer for services that were performed one month earlier.Which of the following accounts is credited?

Accepted Answer

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

Question 16

A business makes a cash payment of $12,000 to a creditor.Which of the following accounts is credited?

Accepted Answer

A)  Cash 
B)  Accounts Payable 
C)  Bank 
D)  Accounts Receivable 
A)  Cash 
B)  Accounts Payable 
C)  Bank 
D)  Accounts Receivable

Question 17

A business purchases equipment in exchange for a note payable.This transaction results in ________.

Accepted Answer

A)  no journal entry because no cash has been paid 
B)  a debit to Notes Payable and a credit to Equipment 
C)  an increase in liabilities 
D)  a debit to Equipment and a credit to Accounts Payable 
A)  no journal entry because no cash has been paid 
B)  a debit to Notes Payable and a credit to Equipment 
C)  an increase in liabilities 
D)  a debit to Equipment and a credit to Accounts Payable

Question 18

Regarding the ledger,which of the following statements is incorrect?

Accepted Answer

A)  Both the chart of accounts and the ledger list the account names and numbers of the business. 
B)  Companies use the ledger to fulfill the task of showing all of the increases and decreases in each account. 
C)  Both the chart of accounts and the ledger provide the balance of each account at a specific point in time. 
D)  The ledger provides more detail than the chart of accounts. 
A)  Both the chart of accounts and the ledger list the account names and numbers of the business. 
B)  Companies use the ledger to fulfill the task of showing all of the increases and decreases in each account. 
C)  Both the chart of accounts and the ledger provide the balance of each account at a specific point in time. 
D)  The ledger provides more detail than the chart of accounts.

Question 19

The ability of a company to pay its debts can be evaluated by using the ________.

Accepted Answer

A)  earnings per share 
B)  return on assets ratio 
C)  debt ratio 
D)  fully diluted earnings per share 
A)  earnings per share 
B)  return on assets ratio 
C)  debt ratio 
D)  fully diluted earnings per share

Question 20

Which of the following is assessed using the debt ratio?

Accepted Answer

A)  profitability 
B)  revenues 
C)  risk of default 
D)  net income 
A)  profitability 
B)  revenues 
C)  risk of default 
D)  net income

Exam 2: Recording Business Transactions

Which of the following is classified as an asset account?

Debit refers to the right side of the T-account,and credit refers to the left side.

The Salaries Payable account is a(n)________.

The process of transferring data from the ledger to the journal is called posting.

For Office Supplies,the category of account and its normal balance is ________.

In a trial balance,total debits must always equal total credits.

A business makes a payment of $1,400 on a note payable.Which of the following journal entries would be recorded?

A business purchases $3,500 of office supplies for cash.Which of the following sets of ledger accounts reflects the posting of this transaction?

A business borrows cash by signing a note payable.Which of the following accounts is credited?

Which is a TRUE statement regarding the accounting equation?

Adams Company recorded the following journal entry on March 2,2018. Cash 8,500 Unearned Revenue 8,500 From the journal entry above,identify the transaction on March 2,2018.

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

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

A business collects cash from a customer for services that were performed one month earlier.Which of the following accounts is credited?

A business makes a cash payment of $12,000 to a creditor.Which of the following accounts is credited?

A business purchases equipment in exchange for a note payable.This transaction results in ________.

Regarding the ledger,which of the following statements is incorrect?

The ability of a company to pay its debts can be evaluated by using the ________.

Which of the following is assessed using the debt ratio?

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

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