Question 1

If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt.

Accepted Answer

A) True 
 B)False

Question 2

Krenz Car Care, owned and operated by Karl Krenz, began business in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow:
Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.

Accepted Answer

The answer of Krenz Car Care, owned and operated by...

Question 3

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:

Accepted Answer

A)  The Office Supplies account balance will be overstated. 
B)  The trial balance will not balance. 
C)  The error will overstate the debits listed in the journal. 
D)  The total debits in the trial balance will be larger than the total credits. 
E)  The error will overstate the credits listed in the journal. 
A)  The Office Supplies account balance will be overstated. 
B)  The trial balance will not balance. 
C)  The error will overstate the debits listed in the journal. 
D)  The total debits in the trial balance will be larger than the total credits. 
E)  The error will overstate the credits listed in the journal.

Question 4

The balances for the accounts of Mike's Maintenance Co. for the year ended December 31 are shown below. Each account shown had a normal balance.
Calculate the correct balance for Cash and prepare a trial balance.

Accepted Answer

The answer of The balances for the accounts of Mike's...

Question 5

The account used to record the transfers of assets from a business to its owner is:

Accepted Answer

A)  A revenue account. 
B)  The owner's withdrawals account. 
C)  The owner's capital account. 
D)  An expense account. 
E)  A liability account. 
A)  A revenue account. 
B)  The owner's withdrawals account. 
C)  The owner's capital account. 
D)  An expense account. 
E)  A liability account.

Question 6

If a company purchases land paying cash, the journal entry to record this transaction will include a debit to Cash.

Accepted Answer

A) True 
 B)False

Question 7

A balance column ledger account is:

Accepted Answer

A)  An account entered on the balance sheet. 
B)  An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted. 
C)  Another name for the withdrawals account. 
D)  An account used to record the transfers of assets from a business to its owner. 
E)  A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction. 
A)  An account entered on the balance sheet. 
B)  An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted. 
C)  Another name for the withdrawals account. 
D)  An account used to record the transfers of assets from a business to its owner. 
E)  A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

Question 8

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 9

Explain the recording and posting processes.

Accepted Answer

Information from business transactions a

Question 10

A list of all accounts and the identification number assigned to each account used by a company is called a:

Accepted Answer

A)  Source document. 
B)  Journal. 
C)  Trial balance. 
D)  Chart of accounts. 
E)  General Journal. 
A)  Source document. 
B)  Journal. 
C)  Trial balance. 
D)  Chart of accounts. 
E)  General Journal.

Question 11

A journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

The answer of The difference between total debits and total...

Question 13

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 cash account at the end of January would be:

Accepted Answer

A)  $41,450. 
B)  $12,225. 
C)  $18,700. 
D)  $15,250. 
E)  $13,500. 
A)  $41,450. 
B)  $12,225. 
C)  $18,700. 
D)  $15,250. 
E)  $13,500.

Question 14

A collection of all accounts and their balances used by a business is called a:

Accepted Answer

A)  Journal. 
B)  Book of original entry. 
C)  General Journal. 
D)  Balance column journal. 
E)  Ledger. 
A)  Journal. 
B)  Book of original entry. 
C)  General Journal. 
D)  Balance column journal. 
E)  Ledger.

Question 15

Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

Accepted Answer

A) True 
 B)False

Question 16

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

Accepted Answer

The answer of _________________ identify and describe transactions and events...

Question 17

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 18

An asset created by prepayment of an expense is:

Accepted Answer

A)  Recorded as a debit to an unearned revenue account. 
B)  Recorded as a debit to a prepaid expense account. 
C)  Recorded as a credit to an unearned revenue account. 
D)  Recorded as a credit to a prepaid expense account. 
E)  Not recorded in the accounting records until the earnings process is complete. 
A)  Recorded as a debit to an unearned revenue account. 
B)  Recorded as a debit to a prepaid expense account. 
C)  Recorded as a credit to an unearned revenue account. 
D)  Recorded as a credit to a prepaid expense account. 
E)  Not recorded in the accounting records until the earnings process is complete.

Question 19

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:

Accepted Answer

A)  Debit Salary Expense and credit Cash. 
B)  Debit Tim Jones, Salary and credit Cash. 
C)  Debit Cash and credit Tim Jones, Withdrawals. 
D)  Debit Tim Jones, Withdrawals and credit Cash. 
E)  Debit Automobiles and credit Cash. 
A)  Debit Salary Expense and credit Cash. 
B)  Debit Tim Jones, Salary and credit Cash. 
C)  Debit Cash and credit Tim Jones, Withdrawals. 
D)  Debit Tim Jones, Withdrawals and credit Cash. 
E)  Debit Automobiles and credit Cash.

Question 20

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

Accepted Answer

The answer of On December 3, the Matador Company paid...

Exam 2: Analyzing and Recording Transactions

If a company is highly leveraged, this means that it has relatively low risk of not being able to repay its debt.

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:

The balances for the accounts of Mike's Maintenance Co. for the year ended December 31 are shown below. Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

The account used to record the transfers of assets from a business to its owner is:

If a company purchases land paying cash, the journal entry to record this transaction will include a debit to Cash.

A balance column ledger account is:

Explain the recording and posting processes.

A list of all accounts and the identification number assigned to each account used by a company is called a:

A journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

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

A collection of all accounts and their balances used by a business is called a:

Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

All of the following are asset accounts except:

An asset created by prepayment of an expense is:

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:

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

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

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

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

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