Question 1

While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

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)  This error will not make any difference.

Question 2

The accounting cycle begins with

Accepted Answer

A)  preparing financial statements and other reports 
B)  analysis of economic events and recording their effects 
C)  posting to the ledger 
D)  presentation of financial information to decision makers 
E)  None of these

Question 3

Purchasing supplies on credit increases assets while decreasing liabilities.

Accepted Answer

A) True 
 B)False

Question 4

Increases in liabilities are recorded as debits.

Accepted Answer

A) True 
 B)False

Question 5

Unearned revenues are

Accepted Answer

A)  revenues that have been earned and received 
B)  revenues that have been earned but not yet collected 
C)  liabilities created by advance cash payments from customers for products or services 
D)  recorded as an asset in the accounting records 
E)  increases to owners' equity

Question 6

What is double-entry accounting?

Accepted Answer

A)  An accounting system that disregards the accounting equation, A = L + E 
B)  An accounting system that records the effects of transactions and other events in at least two accounts with equal debits and credits 
C)  An accounting system in which each transaction affects and is recorded in two or more accounts with unequal debits and equal credits 
D)  An accounting system in which the sum of the debit account balances never equals the sum of the credit account balances 
E)  An accounting system in which errors never occur

Question 7

Discuss the use of the trial balance.

Accepted Answer

The answer of Discuss the use of the trial balance....

Question 8

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 9

Which of the following statements is correct?

Accepted Answer

A)  The left side of a T-account is the credit side. 
B)  Entries that decrease asset and expense accounts, or increase liability, equity, and revenue accounts are posted as debits. 
C)  The left side of a T-account is the debit side. 
D)  The right side of a T-account is the debit side. 
E)  Entries that increase asset, expense, and revenue accounts are posted as debits.

Question 10

The first step in the accounting cycle is to analyze transactions.

Accepted Answer

A) True 
 B)False

Question 11

The following list of accounts is for Shannon Sales Co.:
  Use the form below to identify the type of account and its normal balance. The first one has been done for you as an example.

Accepted Answer

The answer of The following list of accounts is for...

Question 12

A business paid $2,500 to satisfy a previously recorded account payable. Set up two or more T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of A business paid $2,500 to satisfy a...

Question 13

Since all figures are eventually posted to the ledger, the posting reference column in a journal is not necessary.

Accepted Answer

A) True 
 B)False

Question 14

Explain the difference between a ledger and a chart of accounts.

Accepted Answer

The answer of Explain the difference between a ledger and...

Question 15

What are prepaid expenses?

Accepted Answer

A)  Payments made for economic benefits that never expire 
B)  Classified as liabilities on the balance sheet 
C)  Generally, all combined into one account called "Miscellaneous Expenses" 
D)  Assets created by payments for economic benefits that are not used up until later 
E)  Always debited to an expense account

Question 16

Debits increase asset and expense accounts.

Accepted Answer

A) True 
 B)False

Question 17

Discuss how the following transactions affect accounts and financial statements. (1) Jillian Robb invested $30,000 cash in Profile Design Co. (2) Profile Design Co. purchased supplies for $5,000 on its credit card. (3) Profile Design Co. purchased equipment for $19,000 and signed a note payable.

Accepted Answer

The answer of Discuss how the following transactions affect accounts...

Question 18

Debits to accounts are normally decreases.

Accepted Answer

A) True 
 B)False

Question 19

Of the following errors, which one by itself will cause the trial balance to be out of balance?

Accepted Answer

A)  A $200 salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense 
B)  A $100 receipt from a customer in payment of his account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable 
C)  A $75 receipt from a customer in payment of his account posted as a $75 debit to Cash and a $75 credit to Cash 
D)  A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash 
E)  All of these errors will cause the trial balance to be out of balance.

Question 20

The trial balance is a list of the accounts that have balances in the ledger.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing and Recording Transactions

While in the process of posting from the journal to the ledger, the accountant of X Company failed to post a $50 debit to the Office Supplies account. The effect of this error will be as follows:

The accounting cycle begins with

Purchasing supplies on credit increases assets while decreasing liabilities.

Increases in liabilities are recorded as debits.

Unearned revenues are

What is double-entry accounting?

Discuss the use of the trial balance.

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.

Which of the following statements is correct?

The first step in the accounting cycle is to analyze transactions.

The following list of accounts is for Shannon Sales Co.: Use the form below to identify the type of account and its normal balance. The first one has been done for you as an example.

A business paid $2,500 to satisfy a previously recorded account payable. Set up two or more T-accounts below and show how this transaction would be recorded directly in those accounts.

Since all figures are eventually posted to the ledger, the posting reference column in a journal is not necessary.

Explain the difference between a ledger and a chart of accounts.

What are prepaid expenses?

Debits increase asset and expense accounts.

Discuss how the following transactions affect accounts and financial statements. (1) Jillian Robb invested $30,000 cash in Profile Design Co. (2) Profile Design Co. purchased supplies for $5,000 on its credit card. (3) Profile Design Co. purchased equipment for $19,000 and signed a note payable.

Debits to accounts are normally decreases.

Of the following errors, which one by itself will cause the trial balance to be out of balance?

The trial balance is a list of the accounts that have balances in the ledger.