Exam 2: Analyzing and Recording Transactions

If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

A trial balance taken at year-end showed total credits exceed total debits by $4,950. This discrepancy could have been caused by:

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _______________ for $25,000 and the cash account is _______________ for $25,000.

Which of the following statements is true?

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months services in advance. Management Services' general journal entry to record this transaction will include a

The journal is known as the book of final entry because financial statements are prepared from it.

Leonard Matson completed these transactions during December of the current year: Prepare general journal entries to record these transactions.

A general journal is:

Explain the recording and posting processes.

A revenue account normally has a debit balance.

If insurance coverage for the next three years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

The difference between total debits and total credits for an account, including any beginning balance is the _______________________.

The three general categories of accounts in a general ledger are _________________, ________________, and _________________________.

The following is a list of accounts and identification letters A through J for Shannon Management Co.: Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.

Hal Smith opened Smith's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: 1. Smith invested $25,000 cash in the business. 2) Smith contributed $100,000 of equipment to the business. 3) The company paid $2,000 cash to rent office space for the month. 4) The company received $16,000 cash for repair services provided during March. 5) The company paid $6,200 for salaries for the month. 6) The company provided $3,000 of services to customers on account. 7) The company paid cash of $500 for monthly utilities. 8) The company received $3,100 cash in advance of providing repair services to a customer. 9) Smith withdrew $5,000 for his personal use from the company. Based on this information, net income for March would be:

All of the following statements regarding a sales invoice are True except:

Accounts are normally decreased by debits.

When a company provides services for which cash will not be received until some future date, the company should record the amount charged as unearned revenue.

David Roberts is a real estate appraiser. Shown below are (a) several accounts in his ledger with each account preceded by an identification number, and (b) several transactions completed by Roberts. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

If cash was incorrectly debited for $100 instead of correctly credited for $100, the cash account is out of balance by $100.