Question 1

A company had the following accounts and balances year-end:   If all of the accounts have normal balances, what are the totals for the trial balance?

Accepted Answer

A)  $45,200. 
B)  $67,000. 
C)  $104,800. 
D)  $209,600. 
E)  $186,600. 
A)  $45,200. 
B)  $67,000. 
C)  $104,800. 
D)  $209,600. 
E)  $186,600.

Question 2

James Haley owned a sailboat and was tired of his current job. He decided to open a business that provides day sails to tourists in his hometown. Prepare journal entries to record the following transactions.

Accepted Answer

The answer of James Haley owned a sailboat and was...

Question 3

What is a trial balance? What is its purpose?

Accepted Answer

The trial balance is a list of all of th

Question 4

At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Accepted Answer

A)  300%. 
B)  33.3% 
C)  75.0%. 
D)  $400,000. 
E)  Cannot be determined from the information provideD.On the last year-end, total liabilities were $300,000 and total equity was $100,000. That means total assets were $400,000. Therefore, the debt to assets ratio was $300,000/$400,000 or 75.0%. 
A)  300%. 
B)  33.3% 
C)  75.0%. 
D)  $400,000. 
E)  Cannot be determined from the information provideD.On the last year-end, total liabilities were $300,000 and total equity was $100,000. That means total assets were $400,000. Therefore, the debt to assets ratio was $300,000/$400,000 or 75.0%.

Question 5

Which of the following statements describing the debt ratio is false?

Accepted Answer

A)  It is of use to both internal and external users of accounting information. 
B)  A relatively high ratio is always desirable. 
C)  The dividing line for a high and low ratio varies from industry to industry. 
D)  Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E)  The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt. 
A)  It is of use to both internal and external users of accounting information. 
B)  A relatively high ratio is always desirable. 
C)  The dividing line for a high and low ratio varies from industry to industry. 
D)  Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E)  The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Question 6

The following are all of the accounts of Flaherty Company that have a balance at the end of August. All accounts have normal balances:   a. Calculate net income.
b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.

Accepted Answer

The answer of The following are all of the accounts...

Question 7

Dolly Barton began Barton Office Services in October and during that month completed these transactions:
a. Invested $10,000 cash, and $15,000 of computer equipment.
b. Paid $500 cash for an insurance premium covering the next 12 months.
c. Completed a word processing assignment for a customer and collected $1,000 cash.
d. Paid $200 cash for office supplies.
e. Paid $2,000 for October's rent.
Prepare journal entries to record the above transactions. Explanations are unnecessary.

Accepted Answer

The answer of Dolly Barton began Barton Office Services in...

Question 8

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, the balance in Hal Smith, Capital reported on the Statement of Owner's Equity at the end of March would be:

Accepted Answer

A)  $133,400. 
B)  $130,300. 
C)  $125,300. 
D)  $8,400. 
E)  $13,500. 
A)  $133,400. 
B)  $130,300. 
C)  $125,300. 
D)  $8,400. 
E)  $13,500.

Question 9

The chart of accounts is a list of all the accounts used by a company and includes an identification number assigned to each account.

Accepted Answer

A) True 
 B)False

Question 10

Stride Along has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Accepted Answer

A)  38.6%. 
B)  13.4%. 
C)  34.9%. 
D)  25.9%. 
E)  14.9%. 
A)  38.6%. 
B)  13.4%. 
C)  34.9%. 
D)  25.9%. 
E)  14.9%.

Question 11

Double-entry accounting is an accounting system:

Accepted Answer

A)  That records each transaction twice. 
B)  That records the effects of transactions and other events in at least two accounts with equal debits and credits. 
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits. 
D)  That may only be used if T-accounts are used. 
E)  That insures that errors never occur. 
A)  That records each transaction twice. 
B)  That records the effects of transactions and other events in at least two accounts with equal debits and credits. 
C)  In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits. 
D)  That may only be used if T-accounts are used. 
E)  That insures that errors never occur.

Question 12

A transaction that increases an asset and decreases a liability must also affect one or more other accounts.

Accepted Answer

A) True 
 B)False

Question 13

After preparing an (unadjusted) trial balance at year-end,
G. Chu of Chu Design Company discovered the following errors:
1. Cash payment of the $225 telephone bill for December was recorded twice.
2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000.
3. A $900 cash withdrawal by the owner was recorded to the correct accounts as $90.
4. An additional investment of $5,000 cash by the owner was recorded as a debit to
G. Chu, Capital and a credit to Cash.
5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry.
Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column.
Would the error cause the trial balance to be out of balance?
   Would the error cause the trial balance to be out of balance?

Accepted Answer

The answer of After preparing an (unadjusted) trial balance at...

Question 14

All of the following are asset accounts except:

Accepted Answer

A)  Accounts Receivable. 
B)  Buildings. 
C)  Supplies expense. 
D)  Cash. 
E)  Prepaid insurance. 
A)  Accounts Receivable. 
B)  Buildings. 
C)  Supplies expense. 
D)  Cash. 
E)  Prepaid insurance.

Question 15

Which of the following statements is correct?

Accepted Answer

A)  When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. 
B)  Promises of future payment are called accounts receivable. 
C)  Increases and decreases in cash are always recorded in the owner's capital account. 
D)  An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E)  Accrued liabilities include accounts receivable. 
A)  When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. 
B)  Promises of future payment are called accounts receivable. 
C)  Increases and decreases in cash are always recorded in the owner's capital account. 
D)  An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E)  Accrued liabilities include accounts receivable.

Question 16

Transactions are first recorded in the ledger.

Accepted Answer

A) True 
 B)False

Question 17

An account used to record the owner's investments in the business is called a(n):

Accepted Answer

A)  Withdrawals account. 
B)  Capital account. 
C)  Revenue account. 
D)  Expense account. 
E)  Liability account. 
A)  Withdrawals account. 
B)  Capital account. 
C)  Revenue account. 
D)  Expense account. 
E)  Liability account.

Question 18

A _______________ is a list of all the accounts used by a company and their identification codes.

Accepted Answer

The answer of A _______________ is a list of all...

Question 19

The following transactions occurred during July: 1. Received $900 cash for services provided to a customer during July.
2) Received $2,200 cash investment from Barbara Hanson, the owner of the business.
3) Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4) Provided services to a customer on credit, $375.
5) Borrowed $6,000 from the bank by signing a promissory note.
6) Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A)  $900. 
B)  $1,275. 
C)  $2,525. 
D)  $3,275. 
E)  $11,100. 
A)  $900. 
B)  $1,275. 
C)  $2,525. 
D)  $3,275. 
E)  $11,100.

Question 20

Andrea Conaway opened Wonderland Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Conaway invested $13,500 cash in the business.
2) Conaway contributed $20,000 of photography equipment to the business.
3) The company paid $2,100 cash for an insurance policy covering the next 24 months.
4) The company received $5,700 cash for services provided during January.
5) The company purchased $6,200 of office equipment on credit.
6) The company provided $2,750 of services to customers on account.
7) The company paid cash of $1,500 for monthly rent.
8) The company paid $3,100 on the office equipment purchased in transaction #5 above.
9) Paid $275 cash for January utilities.
Based on this information, the balance in the Andrea Conaway, Capital account reported on the Statement of Owner's Equity at the end of the month would be:

Accepted Answer

A)  $31,400. 
B)  $39,200. 
C)  $31,150. 
D)  $40,175. 
E)  $30,875. 
A)  $31,400. 
B)  $39,200. 
C)  $31,150. 
D)  $40,175. 
E)  $30,875.

Exam 2: Analyzing and Recording Transactions

A company had the following accounts and balances year-end: If all of the accounts have normal balances, what are the totals for the trial balance?

James Haley owned a sailboat and was tired of his current job. He decided to open a business that provides day sails to tourists in his hometown. Prepare journal entries to record the following transactions.

What is a trial balance? What is its purpose?

At the end of the current year, Norman Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Which of the following statements describing the debt ratio is false?

The following are all of the accounts of Flaherty Company that have a balance at the end of August. All accounts have normal balances: a. Calculate net income. b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.

The chart of accounts is a list of all the accounts used by a company and includes an identification number assigned to each account.

Stride Along has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Double-entry accounting is an accounting system:

A transaction that increases an asset and decreases a liability must also affect one or more other accounts.

All of the following are asset accounts except:

Which of the following statements is correct?

Transactions are first recorded in the ledger.

An account used to record the owner's investments in the business is called a(n):

A _______________ is a list of all the accounts used by a company and their identification codes.

Accounting in Business

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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