Exam 2: Analyzing and Recording Business Transactions

Receiving cash from a customer for settlement of an Accounts Receivable will

Which of the following guidelines is correct?

Why is the Owner's Withdrawals account increased by a debit? Explain in terms of its relationship to owner's equity.

When the columns of the trial balance equal each other,it is still possible that errors may have occurred in recording and posting the transactions.

The trial balance for Parker Company is as follows: If the trial balance showed a balance of $8,000 in the Wages Expense account and a balance of $85,000 in the Advertising Fees Earned account,what would be the amount of the Mike Parker,Withdrawals account?

The general journal does not have a column titled

A trial balance is normally prepared at the end of each business day.

A journal entry is a notation that consists of either a single debit or a single credit that is recorded in the general ledger.

Proper __________ depends on correctly analyzing the effect of each transaction and on maintaining a system of accounts that reflects that effect.

A transaction should be recorded when title to merchandise passes from the supplier to the purchaser and creates an obligation to pay.

A purchase should usually not be recognized (recorded)before the title is transferred because,until that point,the vendor has not fulfilled its contractual obligation and the buyer has no liability.

Generally,before Accounts Receivable is debited,it is credited.

Which of the following accounts is increased with a credit?

The timing of cash flows is critical to a company's ability to maintain adequate liquidity so that it can pay its bills on time.

For each of the following economic events determine whether the event is a business transaction on the date it occurs and whether it's recognized in the accounts on that date.Support your answer. a On July 15,the controller of Kona Corporation orders a custom display case for the company's store. b.On July 31,a new administrative assistant is hired at a monthly salary of $3,500. c.On July 31,the controller of Kona Corporation receives a bill for electricity for the month of July.The bill is due on August 18 and will be paid on that date.

A purchase is recognized in the accounting records when

One might see "J5" correctly placed in the Post.Ref.column of the journal.

Fair value is the exchange price of an actual or potential business transaction between market participants.

In order to manage a company's liquidity,managers and other users of financial information must understand the difference between transactions that generate immediate cash and those that do not.

Using the following transactions,calculate the ending balance of (A)total assets,(B)total liabilities,(C)Cash,and (D)Owner's Equity.Indicate whether each balance is debit or credit.