Question 1

Prepaid expenses are:

Accepted Answer

A)  Payments made for products and services that do not ever expire. 
B)  Classified as liabilities on the balance sheet. 
C)  Decreases in equity. 
D)  Assets that represent prepayments of future expenses. 
E)  Promises of payments by customers. 
A)  Payments made for products and services that do not ever expire. 
B)  Classified as liabilities on the balance sheet. 
C)  Decreases in equity. 
D)  Assets that represent prepayments of future expenses. 
E)  Promises of payments by customers.

Question 2

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.

Question 3

A business paid $100 cash to Karen Smith (the owner of the business) for her personal use. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of A business paid $100 cash to Karen...

Question 4

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

Accepted Answer

The answer of The second step in the analyzing and...

Question 5

At the beginning of January of the current year, Thomas Law Center's ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Thomas $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

Accepted Answer

A)  $54,700. 
B)  $49,700. 
C)  $2,300. 
D)  $54,300. 
E)  $49,300. 
A)  $54,700. 
B)  $49,700. 
C)  $2,300. 
D)  $54,300. 
E)  $49,300.

Question 6

In which of the following situations would the trial balance not balance?

Accepted Answer

A)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable. 
C)  A $50 cash receipt for the performance of a service was not recorded at all. 
D)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750. 
A)  A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash. 
B)  The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable. 
C)  A $50 cash receipt for the performance of a service was not recorded at all. 
D)  The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200. 
E)  The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

Question 7

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.

Accepted Answer

The answer of A company paid $2,500 cash to satisfy...

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

List the steps in processing transactions.

Accepted Answer

Business transactions and events are the

Question 10

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Accepted Answer

A) True 
 B)False

Question 11

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).

Accepted Answer

A) True 
 B)False

Question 12

A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.

Accepted Answer

A) True 
 B)False

Question 13

Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

Accepted Answer

$275,500/$

Question 14

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 __________________________________.

Accepted Answer

Balance co

Question 15

A credit entry:

Accepted Answer

A)  Increases asset and expense accounts, and decreases liability, owner's capital, and revenue accounts. 
B)  Is always a decrease in an account. 
C)  Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts. 
D)  Is recorded on the left side of a T-account. 
E)  Is always an increase in an account. 
A)  Increases asset and expense accounts, and decreases liability, owner's capital, and revenue accounts. 
B)  Is always a decrease in an account. 
C)  Decreases asset and expense accounts, and increases liability, owner's capital, and revenue accounts. 
D)  Is recorded on the left side of a T-account. 
E)  Is always an increase in an account.

Question 16

An account balance is the difference between the debits and credits for an account including any beginning balance.

Accepted Answer

A) True 
 B)False

Question 17

Identify each of the following items would likely serve as a source document by marking an X in the appropriate column. The first one is done as an example

Accepted Answer

The answer of Identify each of the following items would...

Question 18

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

Accepted Answer

Owner, Capital; owne

Question 19

A credit is used to record:

Accepted Answer

A)  An increase in an expense account. 
B)  A decrease in an asset account. 
C)  A decrease in an unearned revenue account. 
D)  A decrease in a revenue account. 
E)  A decrease in a capital account. 
A)  An increase in an expense account. 
B)  A decrease in an asset account. 
C)  A decrease in an unearned revenue account. 
D)  A decrease in a revenue account. 
E)  A decrease in a capital account.

Question 20

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.

Accepted Answer

The answer of Vicki Lake is a computer consultant. Shown...

Exam 2: Analyzing and Recording Transactions

Prepaid expenses are:

A business paid $100 cash to Karen Smith (the owner of the business) for her personal use. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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

In which of the following situations would the trial balance not balance?

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.

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

List the steps in processing transactions.

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

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).

A trial balance that is in balance is proof that no errors were made in journalizing the transactions, posting to the ledger, and preparing the trial balance.

Montgomery Marketing Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

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 __________________________________.

A credit entry:

An account balance is the difference between the debits and credits for an account including any beginning balance.

Identify each of the following items would likely serve as a source document by marking an X in the appropriate column. The first one is done as an example

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

A credit is used to record:

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

Filters

The four categories of equity accounts are ____________, _, _, and _________.