Deck 3: Recording Transactions

Question 1

Indicate whether each of the following accounts normally possesses a debit (DR)or a credit (CR)balance.
8.Accounts payable

Answer 1

1.DR,2.DR,3.DR,4.DR,5.CR,6.CR,7.DR,8.CR,9.DR,10.DR,11.DR,12.DR,13.CR,14.CR,15.DR

Question 2

Listed below are several accounts from Process Improvements,Inc.for the year ended December 31,2012.Next to each account indicate its normal balance and whether you would need to debit or credit the account to decrease it.Use DR for debit and CR for credit.

Answer 2

Question 3

Source documents are prepared

A)continuously as transactions occur.
B)once per month in order to finalize financial statements.
C)once per quarter in accordance with U.S.GAAP.
D)twice per year in accordance with IFRS.
E)once per year in order to finalize year-end financial statements for investors.

Answer 3

A

Question 4

A ledger contains only balance sheet accounts kept up-to-date in a systematic way.

Question 5

The right side of a T-account always increases an account balance and the left side of a T-account always decreases an account balance.

Question 6

Which of the following transactions would not affect owners' equity?

A)Recording cost of goods sold
B)Recording a cash sale
C)Recording a sale on account
D)Recording utilities expense
E)Purchasing inventory for cash

Question 7

The posting reference number in the general journal is obtained from:

A)source documents.
B)the account number for each account posted to the ledger.
C)the transaction amount.
D)the Income Summary account.
E)the normal balance in each account.

Question 8

T-accounts facilitate the preparation of financial statements at any instant if the account balances are kept up-to-date.

Question 9

Harry Chull purchased supplies from Party Supplies Company on August 14,2012 for $540 cash.Party Supplies Company purchased the supplies for $75 on August 1,2012.What steps must Party Supplies Company follow to record the sale to Harry Chull? After listing the step,describe in detail the specific transaction Party Supplies Company is recording.

Question 10

A book of original entry is a chronological record of an entity's transactions.

Question 11

T-accounts focus on account balances while journal entries focus on transactions.

Question 12

A T-account is an analysis of an account.

Question 13

The account numbers from the chart of accounts are

A)not allowed to be used to prepare journal entries; account names must be used.
B)allowed to be used to prepare journal entries.
C)allowed to be used to prepare journal entries if an organization has 100 or more account numbers.
D)allowed to be used to prepare journal entries if an organization has $1 million or more in total revenues.
E)allowed to be used to prepare journal entries if an organization also uses the account numbers in financial statements prepared for investors and creditors.

Question 14

Which of the following accounts is classified differently from the others in the list?

A)Notes Payable
B)Accounts Receivable
C)Merchandise Inventory
D)Prepaid Rent
E)Cash

Question 15

T-accounts can only be used for income statement accounts.

Question 16

The recording process has a sequence of five steps.What is the specific order of the steps?

A)Journal,trial balance,financial statements,ledger,transaction documentation
B)Transaction documentation,journal,ledger,trial balance,financial statements
C)Transaction documentation,ledger,journal,trial balance,financial statements
D)Ledger,journal,transaction documentation,trial balance,financial statements
E)Trial balance,financial statements,ledger,journal,transaction documentation

Question 17

What is the final step in the recording process?

A)preparation of trial balance
B)preparation of journal entries
C)preparation of source documents
D)transferring journal entries in the general journal to the ledger
E)preparation of financial statements

Question 18

Which of the following accounts is increased with a debit?

A)Accounts Payable
B)Notes Payable
C)Merchandise Inventory
D)Capital
E)Sales Revenue

Question 19

Which of the following statements is true regarding attributes of the general ledger and the general journal?

A)Both the general ledger and the general journal focus on general accounting concepts and not specific events or occurrences.
B)The general journal displays the balance in a particular account.
C)The general ledger and the general journal are separate and distinct accounting records that are not related or cross-referenced to each other.
D)The general ledger is account driven and the general journal is transaction driven.
E)General ledger accounts are only used in ERP systems.

Question 20

Which of the following is not an example of a source document?

A)Check stubs
B)Sales receipts
C)Purchase orders
D)Minutes of the board of directors
E)The Wall Street Journal

Question 21

Materials Handling Company sold merchandise inventory costing $7,000 for $12,000 in cash.How should Materials Handling Company record this transaction?

A)debit Cash for $12,000,credit Sales for $7,000,and credit Merchandise Inventory for $7,000
B)debit Cash for $12,000,debit Cost of Goods Sold for $7,000,credit Sales for $12,000,and credit Merchandise Inventory for $7,000
C)debit Cash for $12,000,debit Merchandise Inventory for $7,000,credit Sales for $12,000,and credit Cost of Goods Sold for $7,000
D)debit Sales for $12,000,debit Merchandise Inventory for $7,000,credit Cash for $12,000,and credit Cost of Goods Sold for $7,000
E)debit Sales for $12,000,debit Cost of Goods Sold for $7,000,credit Cash for $12,000,and credit Merchandise Inventory for $7,000

Question 22

Publishing for Personnel,Inc.,received and paid its utility bill of $800.As the accountant,you would tell the bookkeeper to

A)debit Utility Expense and credit Cash for $800.
B)debit Cash and credit Utility Payable for $800.
C)debit Cash and credit Utility Expense for $800.
D)debit Cash and credit Retained Earnings for $800.
E)debit Utility Receivable and credit Cash for $800.

Question 23

Sharpington,Inc.manufactures and sells phone cases.The company sold a shipment of cases costing $5,000 to a customer for $8,000.The customer paid cash.Which of the following is the journal entry that Sharpington would make to record the sale of the shipment of cases?

Question 24

A compound journal entry

A)is a general ledger transfer that affects more than two accounts.
B)is a general journal transfer that affects more than two accounts.
C)is a journal entry for more than two transactions that affects one or more accounts.
D)is a journal entry for a transaction that affects more than two accounts.
E)is not allowed in accordance with U.S.GAAP,but is allowed in accordance with IFRS.

Question 25

Application Technologies has acquired equipment costing $15,000.The company paid $5,000 and gave a 10-month note for the balance.The bookkeeper should

A)debit Equipment for $15,000,credit Cash for $5,000,and credit Notes Receivable for $10,000.
B)debit Cash for $5,000,debit Notes Receivable for $10,000,and credit Equipment for $15,000.
C)debit Equipment for $15,000,credit Cash for $5,000,and credit Notes Payable for $10,000.
D)debit Cash for $5,000,debit Notes Payable for $10,000,and credit Equipment for $15,000.
E)debit Equipment for $15,000,debit Cash for $5,000,credit Notes Payable for $10,000,and credit Paid-in Capital for $5,000.

Question 26

On October 1,2012,Water Works paid $3,600 for 6 months' rent in advance.The appropriate journal entry was made at the time using Prepaid Rent.No other journal entry has been made.As of December 31,2012,Water Works should

A)debit Rent Expense and credit Prepaid Rent for $1,200.
B)debit Rent Expense and credit Prepaid Rent for $1,800.
C)debit Prepaid Rent and credit Rent Expense for $1,800.
D)debit Prepaid Rent and credit Rent Expense for $1,200.
E)No journal entry is necessary as of December 31,20X9.

Question 27

Kasper Shack,Inc.acquired merchandise inventory for $1,300 cash on January 12^th.On January 21^st,it noticed that the wrong merchandise had been shipped and returned it to the supplier for a cash refund.Which of the following is the journal entry that would be required for the return of the merchandise on January 21^st?

Question 28

Darla Documentation,paid $1,900 to the local newspaper for advertising that will begin in 30 days and continue for the following 6 weeks.How would Darla Documentation record this transaction?

A)Debit Cash and credit Advertising Expense for $1,900
B)Debit Prepaid Advertising and credit Advertising Expense for $1,900
C)Debit Advertising Expense and credit Prepaid Advertising for $1,900
D)Debit Cash and credit Prepaid Advertising for $1,900
E)Debit Prepaid Advertising and credit Cash for $1,900

Question 29

On July 1,2012,Norton Company paid $2,400 for rent on the building it occupies.This rent payment is for the 3-month period of July 1 to September 30,2012.Which of the following is the journal entry to be made on July 1,2012?

Question 30

Chordley Manufacturing borrowed $12,000 from the Second National Bank of Tahoma on October 1,2012.The note carries an annual interest rate of 10%,which will be paid once a year on September 30.The company has not recognized any interest expense during 2012.What is the journal entry necessary to recognize interest expense as of December 31,2012?

Question 31

The entry to record the cost of merchandise inventory sold involves a

A)debit to Merchandise Inventory and a credit to Sales Revenue.
B)debit to Cost of Goods Sold and a credit to Merchandise Inventory.
C)debit to Merchandise Inventory and a credit to Cost of Goods Sold.
D)debit to Cost of Goods Sold and a credit to Sales Revenue.
E)debit to Merchandise Inventory and a credit to Accounts Receivable.

Question 32

Palladia Publishing paid $450 for an advertisement that will appear in today's newspaper.Which of the following is the journal entry to record this transaction?

Question 33

The journal entry to acquire equipment costing $30,000 with a $12,000 down payment and a note issued for the difference would include a

A)debit to Cash for $18,000 and a credit to Equipment for $30,000.
B)debit to Equipment for $30,000 and a credit to Notes Payable for $12,000.
C)debit to Equipment for $30,000,credit to Notes Payable for $18,000,and a credit to Cash for $12,000.
D)debit to Equipment for $30,000,credit to Notes Payable for $12,000,and a credit to Cash for $18,000.
E)debit to Equipment for $30,000 and a credit to Cash for $30,000.

Question 34

If a company would like to repay a bank loan of $7,000,the bookkeeper would

A)debit Cash and credit Notes Receivable for $7,000.
B)debit Notes Receivable and credit Cash for $7,000.
C)debit Cash and credit Accounts Payable for $7,000.
D)debit Cash and credit Notes Payable for $7,000.
E)debit Notes Payable and credit Cash for $7,000.

Question 35

Bethany Industries purchased $3,000 of merchandise inventory,paying cash for 20% of the purchase,with the remainder on account.The entry would include a

A)debit to Cash for $600,debit to Accounts Payable for $2,400,and credit to Merchandise Inventory for $3,000.
B)debit to Cash for $800,debit to Notes Payable for $2,200,and credit to Merchandise Inventory for $3,000.
C)debit to Merchandise Inventory for $3,000,credit to Cash for $600,and credit to Notes Payable for $2,400.
D)debit to Merchandise Inventory for $3,000,credit to Cash for $600,and credit to Accounts Payable for $2,400.
E)debit to Merchandise Inventory for $600,and credit to Cash for $600.

Question 36

Posting is the process of transferring information from the

A)journal to the ledger.
B)ledger to the journal.
C)journal to the balance sheet.
D)income statement to the balance sheet.
E)ledger to the income statement and balance sheet.

Question 37

The entry to collect cash on account involves a

A)debit to Cash and a credit to Accounts Payable.
B)debit to Accounts Receivable and a credit to Cash.
C)debit to Cash and a credit to Accounts Receivable.
D)debit to Accounts Receivable and a credit to Accounts Payable.
E)debit to Cash and a credit to Sales Revenue.

Question 38

Indirect Personnel,Inc.obtained a $20,000 note payable on August 1,2012,that is due in 5 years.Interest,at an annual rate of 12%,will be paid once a year on July 31.The accountant made the appropriate journal entry on August 1,2012.No other journal entry has been made.What journal entry is necessary as of December 31,2012?

A)Debit Interest Expense and credit Notes Payable for $1,000
B)Debit Interest Expense and credit Notes Payable for $2,400
C)Debit Interest Expense and credit Interest Payable for $1,000
D)Debit Interest Expense and credit Interest Payable for $2,400
E)Debit Interest Expense and credit Interest Receivable for $2,400

Question 39

Wilham Roofing acquired merchandise inventory for $12,000,paying one-fourth in cash and the remainder on open account.Which of the following is the journal entry necessary to record this transaction?

Question 40

Contributor Enterprise borrowed $2,400 on February 1,2012.All interest has been paid and properly recorded for separately.On March 31,2012,the company repaid the loan.Which of the following is the journal entry to be made at the time of the loan repayment?

Question 41

Debits are always journalized after credits.

Question 42

Given the following transactions,what is the ending balance in the Cash account? 1.The owner started the company by investing $6,000 cash.
2)The company paid $1,200 for 6 months' rent in advance.
3)The company acquired $2,400 in merchandise inventory with one-half of the purchase on account.
4)The company sold merchandise inventory costing $1,500 for $3,100 on account.

A)$3,600 debit balance
B)$3,600 credit balance
C)$5,100 credit balance
D)$4,800 debit balance
E)$4,800 credit balance

Question 43

Accumulated depreciation is classified as a(n)

A)asset account.
B)liability account.
C)contra asset account.
D)contra liability account.
E)equity account.

Question 44

Which of the following accounts are expected to have a debit normal balance? 1.Merchandise Inventory
2)Rent Expense
3)Paid-in Capital
4)Accumulated Depreciation
5)Sales
6)Prepaid Rent
7)Accounts Payable

A)Merchandise Inventory,Rent Expense,Prepaid Rent
B)Merchandise Inventory,Paid-in Capital,Sales,Prepaid Rent
C)Paid-in Capital,Accumulated Depreciation,Sales,Accounts Payable
D)Rent Expense,Accumulated Depreciation,Accounts Payable
E)Merchandise Inventory,Paid-in Capital,Accumulated Depreciation,Accounts Payable

Question 45

Florings Company purchased merchandise costing $900,one-fourth of which was acquired on open account,and the rest was paid in cash.Which set of T-accounts best describes this transaction?

Question 46

From the following information,determine the ending balance in Retained Earnings.

A)$ 6,200
B)$ 8,900
C)$12,700
D)$18,900
E)$20,000

Question 47

Randy Stall invests $25,000 in cash in the company to start his own company.Randy Stall should:

A)debit Retained Earnings and credit Cash for $25,000.
B)debit Cash and credit Retained Earnings for $25,000.
C)debit Paid-in Capital and credit Retained Earnings for $25,000.
D)debit Paid-in Capital and debit Retained Earnings for $25,000.
E)debit Cash and credit Paid-in Capital for $25,000.

Question 48

Holand,Inc.,determines that depreciation amounts to $900 for the period.The entry includes a

A)debit Depreciation Expense and credit Accumulated Depreciation for $900.
B)debit Accumulated Depreciation and credit Equipment for $900.
C)debit Depreciation Expense and credit Equipment for $900.
D)debit Equipment and credit Accumulated Depreciation for $900.
E)debit Accumulated Depreciation and credit Depreciation Expense for $900.

Question 49

Journalizing is the analysis of the effects of a transaction on the accounts,usually accompanied by an explanation.

Question 50

Grogle Company had to calculate book value on its die cutting machine.The company paid $32,000 for the equipment on January 1,2012,but its current appraised value is $46,000.On December 31,2015,accumulated depreciation on the machine is $12,000.What is Grogle Company's book value on the die cutting machine at December 31,2015?

A)$14,000
B)$32,000
C)$46,000
D)$20,000
E)$34,000

Question 51

Full Scale Cleaning and More paid 8 months insurance in advance amounting to $3,200.A prepaid asset was established.At the end of the first month,the entry would include a

A)debit to Prepaid Insurance for $3,200.
B)credit to Insurance Expense for $3,200.
C)debit to Insurance Expense for $2,800.
D)debit to Insurance Expense for $400.
E)debit to Prepaid Insurance for $400.

Question 52

Negative numbers are never used in the journal or the ledger; the effect on the account is conveyed by the side on which the number appears.

Question 53

Picture Perfect Videos acquired $18,000 of equipment by paying $6,000 in cash,with the remaining balance on a note due in 6 months.Which set of T-accounts best describes this transaction?

Question 54

Which of the following accounts are expected to have a credit normal balance? 1.Cash
2)Salary Expense
3)Retained Earnings
4)Accumulated Depreciation
5)Sales
6)Prepaid Rent
7)Accounts Payable

A)Cash,Retained Earnings,Sales
B)Salary Expense,Accounts Payable,Accumulated Depreciation
C)Cash,Retained Earnings,Accumulated Depreciation,Prepaid Rent,Accounts Payable
D)Cash,Salary Expense,Prepaid Rent
E)Retained Earnings,Accumulated Depreciation,Sales,Accounts Payable

Question 55

All Handles,Inc.began operations on February 1,2012,and purchased $4,000 of supplies.On December 31,2012,$1,200 were still on hand.The December 31,2012,entry would include a

A)debit to Supplies Expense for $1,200.
B)debit to Supplies for $4,000.
C)credit to Supplies Expense for $1,200.
D)credit to Supplies Expense for $2,800.
E)debit to Supplies Expense for $2,800.

Question 56

Which of the following is a distinguishing feature of a contra account?

A)If a contra account has a credit balance,then its companion account will usually have a debit balance.
B)If a contra account has a credit balance,then its companion account will usually have a credit balance.
C)A contra account usually has a dollar balance larger than its companion account.
D)Contra accounts are found only in the liability section of the balance sheet.
E)Contra accounts do not follow generally accepted accounting principles,while their companion accounts do follow generally accepted accounting principles.

Question 57

To record the prepaid rent that has expired during the period,the entry would include a debit to

A)Prepaid Rent.
B)Rent Expense.
C)Retained Earnings.
D)Accrued Rent.
E)Unearned Rent.

Question 58

Posting is the transferring of amounts from the journal to the appropriate accounts in the ledger.

Question 59

Which of the following would not be found in a general journal?

A)The ending balance in an account
B)Separate columns for debits and credits
C)The date of the transaction
D)The account names in a transaction
E)A posting reference

Question 60

Posting is the process of transferring amounts from the ledger to the financial statements.

Question 61

Selected accounts from Taylor Company as of March 31,2012,follow:
Required:
1.Journalize the transactions for Taylor Company.
2.Prepare an analysis of the transactions using the balance sheet equation.
3.Prepare an income statement for the month ending March 31.
4.Prepare a balance sheet at March 31.

Question 62

Prepare the necessary journal entries for each of the following transactions for Klokel,Inc.
a.Klokel,Inc.sold 1,200 shares of common stock at $30 per share in cash.
b.The company purchased equipment for $14,000,paying $4,000 in cash and the remainder in a note.
c.The company paid the current month's rent,which amounted to $900,and the current month's utilities,which amounted to $400.
d.Merchandise inventory costing $1,900 was sold on account for $4,100.
e.Depreciation on the equipment amounted to $600.

Question 63

Prepare the journal entries for each of the six transactions depicted in the following T-accounts,along with a brief explanation as to the nature of the transaction.

Question 64

The normal balance for any account is the side of the account where increases are recorded.

Question 65

Which of the following accounts would not be found on the credit side of a trial balance?

A)Equipment
B)Accounts Payable
C)Retained Earnings
D)Sales Revenue
E)Paid-in Capital

Question 66

Liabilities are known as contra assets.

Question 67

Since revenues and expenses are associated with stockholders' equity,revenues and expenses must have normal balances on the same side of a T-account.

Question 68

Northstar Enterprises had the following balances as of December 31,2011:
During 2012,the following activity occurred:
1.$73,100 was paid by customers in advance for work to be performed by the company.The balance in the unearned revenue account as of December 31,2012,was $7,700.
2.Credit sales were $497,100.As of December 31,2012,the accounts receivable balance was $32,900.
3.Accounts payable is solely attributable to the acquisition of merchandise inventory on account.Credit purchases of merchandise inventory during 2012 were $291,000.The balance in accounts payable as of December 31,2012,was $13,100.
Required:
a.What was the amount of cash received from credit customers in 2012?
b.How much cash was paid by the company for the credit purchase of merchandise inventory related to its accounts payable in 2012?
c.How much sales revenue was recognized by the company in 2012,related to the work performed for customers who paid in advance?

Question 69

Given the following complete list of balances,what will be the total credits in the trial balance,assuming no errors exist in the accounts? Note: The accounts payable records were damaged by a flood,and the company is not certain what the correct balance should be.

A)$72,000
B)$69,000
C)$58,000
D)$87,000
E)Due to the damage of the accounts payable records,it is impossible to determine the amount of the total credits on the trial balance.

Question 70

The accumulated depreciation is sometimes referred to as the allowance for depreciation.

Question 71

The purchase of office equipment on account would increase assets and decrease stockholders' equity.

Question 72

Given the following balances,what would the total credits in the trial balance equal?

A)$103,000
B)$129,000
C)$ 97,000
D)$78,000
E)$83,000

Question 73

Assets,expenses,and revenues have normal balances on the debit side of a T-account.

Question 74

The purchase of office supplies on account would include a debit to accounts payable and a credit to office supplies.

Question 75

Following are accounts in alphabetical order,which are numbered for identification,followed by a series of transactions.For each transaction,determine what account(s)should be debited and credited,and place the number associated with that account in the appropriate debit or credit column.
8.Merchandise Inventory
f.Sold merchandise inventory on account,
h.Sold merchandise inventory for cash,

Question 76

The purchase of a building with a down payment of cash and the signing of a note payable for the remainder would include a debit to both the Building account and the Notes Payable account,and a credit to the Cash account.

Question 77

A debit increases the balance of assets and liabilities.

Question 78

A credit decreases the balance of assets and expenses.

Question 79

The trial balance should be prepared

A)after preparing the financial statements.
B)before posting beginning balances to new accounts.
C)after posting closing entries.
D)before posting journal entries to the ledger.
E)after posting journal entries to the ledger.

Question 80

A compound entry is when two or more journal entries are made.