Exam 2: Analyzing and Recording Transactions

The trial balance is a list of all accounts and their balances at a point in time taken from the ledger.

A debit entry is always favorable.

The second step in the analyzing and recording process is to record the transactions and events in the ____________________________.

Both U.S. GAAP and IFRS prepare the same four basic financial statements.

Maria Sanchez began business as Sanchez Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30. a) Sanchez invested $15,000 cash and a law library valued at $6,000. b) Purchased $7,500 of office equipment from Johnson Bros. on credit. c) Completed legal work for a client and received $1,500 cash in full payment. d) Paid Johnson Bros. $3,500 cash in partial settlement of the amount owed. e) Completed $4,000 of legal work for a client on credit. f) Sanchez withdrew $2,000 cash for personal use. g) Received $2,500 cash as partial payment for the legal work completed for the client in (e). h) Paid $2,500 cash for the legal secretary's salary.

The heading on each financial statement lists the three W's - Who (the name of the organization), What (the name of the statement), and Where (the organization's address).

Flora Accounting Services completed these transactions in February: a. Purchased office supplies on account, $300. b. Completed work for a client on credit, $500. c. Paid cash for the office supplies purchased in (a). d. Completed work for a client and received $800 cash. e. Received $500 cash for the work described in (b). f. Received $1,000 from a client for accounting services to be performed in March. Prepare journal entries to record the above transactions. Explanations are not necessary.

A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is a(n):

A company paid $2,500 cash to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Describe source documents and their purpose.

The four categories of equity accounts are ____________________, _________________, _____________________, and _____________________.

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account.

Posting is the transfer of journal entry information to the ledger.

Vicki Lake is a computer consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Lake. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

An account format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the __________________________________.

On December 3, the Matador Company paid $5,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

A company sends a $1,500 bill to a customer for delivery services rendered. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: If Josephine invested an additional $12,000 in the business and withdrew $5,000 during the year, what was the amount of net income earned by Josephine's Bakery?

A compound journal entry affects no more than two accounts.

While in the process of posting from the journal to the ledger a company failed to post a $500 debit to the Office Supplies account. The effect of this error will be that: