Exam 2: Analyzing and Recording Transactions

A general journal is:

A debit:

A debit entry is always favorable.

Asset accounts normally have credit balances and revenue accounts normally have debit balances.

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

IFRS do not require the use of accrual basis accounting.

Source documents provide evidence of business transactions and are the basis for accounting entries.

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

The owner's withdrawal account normally has a credit balance since it is an equity account.

A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

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?

The debt ratio is calculated by dividing total assets by total liabilities.

The journal is known as a book of original entry.

Which of the following statements describing the debt ratio is ?

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

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

Which of the following statements is ?

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.

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: