Exam 2: Analyzing Business Transactions

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

Why is the Owner's Withdrawals account increased by a debit? Explain in terms of its relationship to owner's equity.

Posting is performed by transferring information from the

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

For a T account, an account balance is the difference in total dollars between total debit footings and total credit footings.

Which of the following accounts will eventually be followed with an outflow of cash?

For each item below, indicate whether a debit or a credit applies. a. Decrease in Accounts Payable b. Decrease in Land c. Increase in Owner's Capital 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

Briefly discuss the differences between Prepaid Insurance and Insurance Expense.

Here is the trial balance for McLeary Company: If the trial balance showed a balance of $8,000 in the Wages Expense account and a balance of $43,000 in the Advertising Fees Earned account, what would be the amount of A?

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

Which of the following is not a measurement issue in accounting?

The Office Supplies account is classified as a(n)

Despite the advantages of a computer accounting information system, posting still must be done manually.

A transposition error will cause the trial balance to be out of balance by an amount that is evenly divisible by nine.

To find an explanation of a transaction, one should look at the

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?

The cost principle is a solution to the recognition issue.

Here is the trial balance for McLeary Company: On the trial balance, total assets equal

If Accounts Receivable has debit postings of $29,000, credit postings of $22,000, and a normal ending balance of $24,000, which of the following was its beginning balance?

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 two.