Exam 3: The Accounting Cycle: Capturing Economic Events

When recording a journal entry,asset accounts are shown first,followed by liabilities,and finally owners' equity accounts.

Liability accounts should only be debited and never credited.

Every transaction which affects an income statement account also affects a balance sheet account.

A CEO or CFO associated with fraudulent financial reporting could be fined but not imprisoned under the Sarbanes Oxley Act.

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.

A trial balance includes only the balance sheet accounts,income statement accounts are not included on a trial balance.