Exam 3: The Accounting Cycle: Capturing Economic Events

The following transactions occurred during May, the first month of operations for Hunter Products Limited: * Issued 50,000 shares of share capital to the owners of the corporation in exchange for $600,000 cash * Purchased a piece of land for $400,000, making a $150,000 cash down payment and signing a note payable for the balance. * Made a $60,000 cash payment on the note payable from the purchase of land. * Purchased equipment on credit from BBW Limited for $63,000. -Refer to the above data. What are total assets of Hunter Products at the end of May?

(Multiple Choice)

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Question 101

Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this she is following the accounting principle of:

(Multiple Choice)

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Question 102

Which of the following accounts normally has a credit balance?

(Multiple Choice)

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Question 103

Increases in equity are recorded by credits; increases in assets and in liabilities are recorded by debits.

(True/False)

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Question 104

On June 18, Baltic Arena paid $6,600 to Marvin Maintenance Limited for cleaning the arena following a monster truck show held on June 9^th. This transaction:

(Multiple Choice)

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Question 105

Accounting terminology Listed below are nine technical accounting terms introduced in this chapter: Matchingprinciple Debit Trial balance Double-entry Credit Joumal Accounting cycle Ledger Consernatism (A.) The accounting record in which transactions are initially recorded. (B.) A concept designed to avoid overstatement of the financial strength of a company. (C.) A schedule prepared to determine the equality of the debit and credit amounts in the ledger. (D.) An amount entered in the right side of a ledger account. (E.) The sequence of procedures involved in recording transactions, processing the information in the accounting system, and summarizing the information in the form of financial statements. (F.) The accounting record that contains a separate account for each type of asset and liability, and for each element of equity appearing in the balance sheet. (G.) The system of accounting in which every business transaction is recorded by equal dollar amounts of debit and credit entries.

(Essay)

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Question 106

The price of the goods sold or services rendered during a given accounting period is called:

(Multiple Choice)

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Question 107

The process of originally recording a business transaction in the accounting records is termed:

(Multiple Choice)

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Question 108

Earning revenue increases equity and expenses reduce equity, therefore revenues are recorded with debit entries and expenses are recorded with credit entries.

(True/False)

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Question 109

Which of the following errors would be disclosed by preparation of a trial balance?

(Multiple Choice)

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Question 110

Dividends increase equity and therefore should be added to retained earnings.

(True/False)

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Question 111

Recording transactions in general journal Enter the following transactions in the two-column journal of Festive Parties Limited Include a brief explanation of the transaction as part of each journal entry. June $\quad$ 2 $\quad$ Collected an account receivable of $\$ 860$ from a customer, East Limited $\quad$ $\quad$ 5 $\quad$ $\quad$ Issued a check for $\$ 430$ in full payment of an account payable to North Limited $\quad$ $\quad$ 9 $\quad$ $\quad$ Borrowed $\$ 12,000$ cash from the bank by signing a 120 -day note payable. $\quad$ $\quad$ 12 $\quad$ $\quad$ Issued an additional 3,000 shares of share capital in exchange for $\$ 45,000$ cash. $\quad$ $\quad$ 15 $\quad$ $\quad$ Purchased equipment for the business. The pricewas $\$ 13,000$ , of which $\$ 3,000$ was paid in cash; a note payable was issued for the balance. $\quad$ $\quad$ 21 $\quad$ $\quad$ Acquired office furniture from West Company for $\$ 1,100$ on account. $Recording transactions in general journal Enter the following transactions in the two-column journal of Festive Parties Limited Include a brief explanation of the transaction as part of each journal entry. June \quad 2 \quad Collected an account receivable of \$ 860 from a customer, East Limited \quad \quad 5 \quad \quad Issued a check for \$ 430 in full payment of an account payable to North Limited \quad \quad 9 \quad \quad Borrowed \$ 12,000 cash from the bank by signing a 120 -day note payable. \quad \quad 12 \quad \quad Issued an additional 3,000 shares of share capital in exchange for \$ 45,000 cash. \quad \quad 15 \quad \quad Purchased equipment for the business. The pricewas \$ 13,000 , of which \$ 3,000 was paid in cash; a note payable was issued for the balance. \quad \quad 21 \quad \quad Acquired office furniture from West Company for \$ 1,100 on account.$

(Essay)

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Question 112

The matching concept refers to the relationship between revenues and expenses.

(True/False)

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Question 113

Transactions are recorded in the general journal in:

(Multiple Choice)

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Question 114

When making a general journal entry, there can only be one debit and one credit.

(True/False)

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Question 115

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits, but the number of debit and credit entries may differ.

(True/False)

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Question 116

The matching principle:

(Multiple Choice)

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Question 117

Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts. $Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts. \begin{array} { | c | c | c | c | c | } \hline &{ \text { Notes Payable } } &&&{ \text { Account No. } 40 } \\ \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\ \hline & & & & \\ \hline \end{array}$ $Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts. \begin{array} { | c | c | c | c | c | } \hline &{ \text { Notes Payable } } &&&{ \text { Account No. } 40 } \\ \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\ \hline & & & & \\ \hline \end{array}$ $Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts. \begin{array} { | c | c | c | c | c | } \hline &{ \text { Notes Payable } } &&&{ \text { Account No. } 40 } \\ \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\ \hline & & & & \\ \hline \end{array}$ Notes Payable Account No. 40 Date Explanation Debit Credit Balance $Journalize and post basic transactions Precision Grading Co. was organized to grade construction sites. * On June 1, owner Dave Precision deposited $90,000 in a new bank account opened in the name of the business in exchange for stock. * On June 3, the company acquired grading equipment costing $89,000, paying $43,000 cash and signing a note payable for the balance. * On June 10, the company paid $13,000 of the amount owed for equipment acquired on June 3. Instructions: Journalize these three transactions and post to the ledger accounts. \begin{array} { | c | c | c | c | c | } \hline &{ \text { Notes Payable } } &&&{ \text { Account No. } 40 } \\ \hline \text { Date } & \text { Explanation } & \text { Debit } & \text { Credit } & \text { Balance } \\ \hline & & & & \\ \hline \end{array}$

(Essay)

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Question 118

A trial balance that is out of balance indicates that:

(Multiple Choice)

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Question 119

Which of the following accounts normally does not have a debit balance?

(Multiple Choice)

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Question 120

Showing 101 - 120 of 133

Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this she is following the accounting principle of:

Which of the following accounts normally has a credit balance?

Increases in equity are recorded by credits; increases in assets and in liabilities are recorded by debits.

On June 18, Baltic Arena paid $6,600 to Marvin Maintenance Limited for cleaning the arena following a monster truck show held on June 9^th. This transaction:

The price of the goods sold or services rendered during a given accounting period is called:

The process of originally recording a business transaction in the accounting records is termed:

Earning revenue increases equity and expenses reduce equity, therefore revenues are recorded with debit entries and expenses are recorded with credit entries.

Which of the following errors would be disclosed by preparation of a trial balance?

Dividends increase equity and therefore should be added to retained earnings.

The matching concept refers to the relationship between revenues and expenses.

Transactions are recorded in the general journal in:

When making a general journal entry, there can only be one debit and one credit.

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits, but the number of debit and credit entries may differ.

The matching principle:

A trial balance that is out of balance indicates that:

Which of the following accounts normally does not have a debit balance?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Filters

Exam 3: The Accounting Cycle: Capturing Economic Events

Sally Smith had expenses of $800 in June which she paid in July. She declared these expenses on her June income statement. By doing this she is following the accounting principle of:

Which of the following accounts normally has a credit balance?

Increases in equity are recorded by credits; increases in assets and in liabilities are recorded by debits.

On June 18, Baltic Arena paid $6,600 to Marvin Maintenance Limited for cleaning the arena following a monster truck show held on June 9th. This transaction:

The price of the goods sold or services rendered during a given accounting period is called:

The process of originally recording a business transaction in the accounting records is termed:

Earning revenue increases equity and expenses reduce equity, therefore revenues are recorded with debit entries and expenses are recorded with credit entries.

Which of the following errors would be disclosed by preparation of a trial balance?

Dividends increase equity and therefore should be added to retained earnings.

The matching concept refers to the relationship between revenues and expenses.

Transactions are recorded in the general journal in:

When making a general journal entry, there can only be one debit and one credit.

When a company uses the double-entry method, the total dollar amount of debits recorded must equal the total dollar amount of credits, but the number of debit and credit entries may differ.

The matching principle:

A trial balance that is out of balance indicates that:

Which of the following accounts normally does not have a debit balance?

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Property, Plant, and Equipment, Intangible Assets and Natural Resources

Liabilities

Shareholders Equity: Capital

Profit and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Filters

On June 18, Baltic Arena paid $6,600 to Marvin Maintenance Limited for cleaning the arena following a monster truck show held on June 9^th. This transaction: