Exam 2: Analyzing Business Transactions

Which of the following accounts is an asset?

Office supplies are classified as an expense.

The Land and Building accounts may be combined into one account.

To determine the balance of a particular account,one should refer to the

A company that receives money in advance of performing a service.What is the journal entry for the transaction?

Which of the following is a business event that is considered a recordable transaction?

The chart of accounts makes finding accounts in the ledger easier.

A purchase is recognized in the accounting records when

Amalgamated Campus Stores,Inc.(ACS)employed student representatives to market grooming aids,casual clothes,and other such products on college campuses.The representatives organized parties at which they displayed samples of all the products.Students who bought products paid the representative,who in turn ordered the products and paid ACS for them.When the products arrived,the student representatives delivered them to the buyers.The representatives paid ACS less than they charged the buyers.The difference represented the earnings of the representatives,who were not employees of ACS.Wall Street investors admired ACS because the company had enjoyed several years of rapid growth in sales and earnings. Last year,the president of ACS predicted further increases in sales of 30 percent.By December,however,it was apparent that the forecasted sales goals would not be met.So during the last two weeks of December,ACS shipped $23 million of merchandise to the sales representatives to be held for future sales parties.The company billed the student representatives and recorded the shipments as sales.In this way,ACS was able to meet its sales goal for the year. Were these merchandise shipments properly recorded as sales?

Post the following transaction.

A $4,000 machine is purchased by paying $1,000 cash and issuing a promissory note for the remainder.The journal entry should include a

Recording an account with a debit balance as a credit,or vice versa,will cause the trial balance to be out of balance by an amount that is evenly divisible by 2.

The principal purpose of posting is to

Investments by stockholders are recorded in the Common Stock account,not in the Retained Earnings account.

Which of the following events does not result in the recording of an expense?

In the journal provided,prepare journal entries (in good form)for the following transactions.If no entry is required,write "no entry." Omit explanations. Mar. 1 Investors opened a dance school, called Yolonda's Dance Studio, by depositing $\$ 15,000$ into a business bank account in exchange for 15,000 shares of $\$ 1$ par value stock. 2 Paid three months' rent in advance, $\$ 1,800$ . 4 Hired a part-time assistant, to be paid $\$ 250$ per week, starting next week. 6 Purchased sound equipment for $\$ 2,000$ . Paid $\$ 400$ in cash, the remainder to be paid in installments of $\$ 800$ every two weeks. 8 Signed up five students, who will begin lessons on March 10, at $\$ 80$ per week per student. 17 Received the first week's tuition from four students; the fifth student will remit payment in three days. 17 Paid the assistant his first week's wages. 20 Received payment from the fifth student. 21 Paid the first installment on the sound equipment purchased on March 6. 23 Received an electric bill of $\$ 100$ , to be paid April 1 .

For each item below,indicate whether a debit or a credit applies. a. Decrease in Accounts Payable b. Decrease in Land c. Increase in Retained Earnings d. Increase in Unearned Revenue e. Decrease in Interest Payable f. Increase in Prepaid Insurance g. Increase in Wages Expense h. Decrease in Art Supplies i. Increase in Advertising Fees Earned

Provide explanations for the following related journal entries: a. Cash 6,000 Common Stock 6,000 b. Law Library 3,400 Accounts Payable 3,400 c. Cash 600 Accounts Receivable 1,000 Legal Fees Earned 1,600 d. Cash 500 Accounts Receivable 500 e. Accounts Payable 3,400 Cash 3,400

Indicate whether each account below has a normal debit or a normal credit balance. a. Automobiles b. Accounts Payable c. Common Stock d. Prepaid Rent e. Advertising Expense f. Service Revenue g. Dividends h. Retained Earnings i. Land j. Interest Payable k. Notes Receivable

Which of the following is an illustration of the classification issue?