Exam 2: Analyzing Business Transactions

Liabilities are established with debits and eliminated with credits.

When a magazine company receives advance payment for a subscription, what is the required journal entry to be recorded?

Which of the following does not affect Owner's Capital?

Indicate whether each account below has a normal debit or a normal credit balance. a. Cash b. Wages Payable h. Store Equipment c. Wages Expense i. Legal Fees Earned d. Unearned Fees j. Owner's Capital e. Prepaid Insurance f. Notes Payable g. Interest Receivable h. Store Equipment i. Legal Fees Earned j. Owner's Capital k. Depreciation Expense, Buildings

If office equipment is sold at cost in exchange for a promissory note,

Which of the following is a business event that is not considered a recordable transaction?

The withdrawal of cash by the owner will

Another word for expense is debt.

The most generally accepted value used in accounting is market value.

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

One can obtain a clear picture of a company's liquidity by referring to its income statement.

Which of the following errors will cause a trial balance to be out of balance?

Which of the following transactions increases both assets and owner's equity?

Which pair of accounts follows the rules of debit and credit in the same manner?

It is sometimes correct for a compound entry's debit totals and credit totals to be unequal.

Here is the trial balance for McLeary Company: If the trial balance showed a balance of $4,000 in the Wages Expense account and a balance of $42,500 in the Advertising Fees Earned account, what would be the amount of the Art McLeary, Withdrawals account?

Unearned revenues are classified as liabilities on the balance sheet.

Which of the following accounts might be placed first in a journal entry?

Which of the following accounts is an asset?

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