Exam 2: Analyzing Business Transactions

Expenses should be recorded when they are paid,not when they have been incurred.

Unearned revenues are classified as liabilities on the balance sheet.

Briefly discuss the differences between Prepaid Insurance and Insurance Expense.

The account most recently posted is determined most efficiently by referring to the

In the journal provided,prepare journal entries (in good form)for the following transactions.If no entry is required,write "no entry." Omit explanations. Apr. 1 Investors opened a dry cleaning service, called Same Day Cleaners, by depositing $\$ 60,000$ into a business bank account and receiving 60,000 shares of $\$ 1$ par value stock in exchange. 3 Paid two years' rent in advance, $\$ 14,400$ . 6 Purchased dry cleaning equipment for $\$ 40,000$ . Paid $\$ 8,000$ in cash, the remainder to be paid in two weeks. 9 Hired a part-time worker, to be paid $\$ 300$ per week, starting tomorrow. 17 Paid the worker's weekly wage. 17 Recorded cash received for services performed during the week, $\$ 3,000$ . 20 Paid for the remainder of the equipment purchased on April 6. 21 Received $\$ 200$ in advance of cleaning and boxing a wedding gown. 23 Performed $\$ 500$ of dry cleaning services for Asa's Tuxedo Shop. It will remit payment in three days. 24 Paid the weekly wages. 26 Received payment from Asa's Tuxedo Shop. 30 Received a telephone bill for $\$ 100$ , which will be paid in two weeks.

When a company purchases goods that it will resell,it must record the goods in an expense account.

Unearned revenues are recorded by companies that

Which of the following does not affect retained earnings?

Which of the following accounts has a normal debit balance?

The amount of profit would always be equal to the ending cash balance.

The process of transferring journal entry information from the journal to the ledger is called

The ledger account form has a Balance column.

A decrease in a liability is recorded by a debit.

Here is the trial balance for McLeary Corporation: McLeary Corporation Trial Balance January 31, 2010 Cash \ 3,000 Accounts Receivable 2,000 Art Supplies 3,000 Office Supplies 5,000 Prepaid Rent 7,000 Prepaid Insurance 5,000 Art Equipment 5,000 Office Equipment 3,000 Accounts Payable \ 10,000 Common Stock 5,000 Retained Earnings 5,000 Dividends ? Advertising Fees Earned ? Wages Expense ? Utilities Expense 5,000 Telephone Expense 3,000 \A \B If the trial balance showed a balance of $7,000 in the Dividends account and a balance of $11,000 in the Wages Expense account,what would be the amount of Advertising Fees Earned for the period?

When a company receives an electric bill but does not pay it right away,what is the required journal entry to be recorded?

Typically,the chart of accounts begins with

Which of the following accounts probably would be listed after the others in a chart of accounts?

Fair Value is the exchange price associated with a business transaction at the time the transaction is recognized.

When stockholders make an investment,the Common Stock account is debited.

When payment is received for services not yet rendered,no entry is recorded until that service has been rendered.