Exam 2: Measurement Concepts: Recording Business Transactions

The controller for Tires and More,Inc.has recorded the following transactions during the month: the purchase of supplies on credit,$4,200;receipt of a bill for utilities for the month which is due on the 15th of the next month,$1,200;and,partial payment on the balance due for supplies,$800.What is the balance in the Accounts Payable account at the end of the month assuming a beginning balance of $0,and is the balance a debit or a credit?

Using the alphabetical list of account balances presented below,all of which are normal,prepare a trial balance for Cookies and Cream Company at June 30,20x5,in proper order.Compute the balance of the Cash account.

Ironwood Company has just started operations.The company sold 5,000 shares of common stock to investors for $10,000 to get the business started.The company has made several sales on account,but has not yet collected any cash from these sales.At this point,Ironwood's cash flows for expenses are exceeding its cash flows from revenues.How might Ironwood make up the difference so it can maintain its liquidity?

A company records a transaction in which six months' rent is paid in advance.Which of the following journal entries records the transaction?

The timing of cash flows is critical to a company's ability to maintain adequate liquidity so that it can pay its bills on time.

The valuation issue deals with how the components of a transaction should be categorized.

Discuss the difference between business events that are transactions and those that are not.Why is the distinction important?

Entering transactions into the journal is called posting.

Use this journal entry to answer the following question. Explain how the above journal entry relates to the measurement issues of (a)recognition, (b)valuation,and (c)classification.

A debit has an unfavorable effect on an account.

The double-entry system is possible because all business transactions have at least two equal and opposite aspects.

All sales transactions generate immediate cash.

Which of the following accounts is increased with a debit?

The Common Stock account represents the stockholders' claim against specific assets of the company,while the Retained Earnings account represents the stockholders' claim against the general assets of the company.

Which of the following is the final step in the accounting cycle?

Which of the following is the first step in the accounting cycle?

The general ledger is used to record the details of each transaction.The general journal is used to update each account.

The trial balance for Parker Company is as follows: If the trial balance showed a balance of $14,000 in the Dividends account and a balance of $30,000 in the Wages Expense account,what would be the amount of Advertising Fees Earned for the period?

To find a description of a transaction,one should look at the