Question 1

Which of the following is true regarding normal balances of accounts?

Accepted Answer

A)  All accounts have a normal debit balance. 
B)  The normal balance of all accounts will have either a positive or negative balance. 
C)  Accounts that have a normal debit balance will only have debit entries, never credit entries. 
D)  The normal balance is on the increase side of the account.

Question 2

On January 7, Damien Lawson invests $45,000 to initiate the operation of his business, JumpStart. Provide the journal entry for this transaction.

Accepted Answer

The answer of On January 7, Damien Lawson invests $45,000...

Question 3

On January 8, Damien Lawson transfers ownership of several pieces of office equipment to his new business, JumpStart. When new, these items were worth $72,500. The fair market value of the equipment is $60,000. Journalize this transfer.

Accepted Answer

The answer of On January 8, Damien Lawson transfers ownership...

Question 4

An overpayment error was discovered in computing and paying the wages of a Jamison Tree Trimming employee. When Jamison receives cash from the employee for the amount of the overpayment, which of the following entries will Jamison make?

Accepted Answer

A)  Cash, debit; Wages Expense, credit 
B)  Wages Payable, debit; Wages Expense, credit 
C)  Wages Expense, debit; Cash, credit 
D)  Cash, debit; Wages Payable, credit

Question 5

In which order are the accounts listed in the chart of accounts?

Accepted Answer

A)  assets, expenses, liabilities, owner's equity, revenues 
B)  owner's equity, assets, liabilities, revenues, expenses 
C)  assets, liabilities, owner's equity, revenues, expenses 
D)  assets, liabilities, revenues, expenses, owner's equity

Question 6

The recording of cash payments from the cash account is done by entering the amount as a credit.

Accepted Answer

A) True 
 B)False

Question 7

Several types of errors can be made during the journalizing and posting process. Match the following with their best description.
-Balance entered in wrong column or omitted

Accepted Answer

A) Trial balance preparation errors 
B) Account balance errors 
C) Posting errors
Challenging

Question 8

Which of the following abbreviations is correct?

Accepted Answer

A)  Debit, "Dr"; Credit, "Cd" 
B)  Debit, "Db"; Credit, "Cr" 
C)  Debit, "Db"; Credit, "Cd" 
D)  Debit, "Dr"; Credit, "Cr"

Question 9

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Accepted Answer

A) True 
 B)False

Question 10

Accounts are records of increases and decreases in individual financial statement items.

Accepted Answer

A) True 
 B)False

Question 11

If the two totals of a trial balance are not equal, it could be due to

Accepted Answer

A)  failure to record a transaction 
B)  recording the same erroneous amount for both the debit and the credit parts of a transaction 
C)  an error in determining the account balances, such as a balance being incorrectly computed 
D)  recording the same transaction more than once

Question 12

The chart of accounts for Corning Company includes the following:
 $$\begin{array} { | l | c | } 
\hline{ \text { Account Name } } & \text { Account Number } \
\hline \text { Cash } & 11 \
\hline \text { Accounts Receivable } & 13 \
\hline \text { Prepaid Insurance } & 15 \
\hline \text { Accounts Payable } & 21 \
\hline \text { Unearned Revenue } & 24 \
\hline \text { Corning Capital } & 31 \
\hline \text { Corning Drawing } & 32 \
\hline \text { Fees Earned } & 41 \
\hline \text { Salaries Expense } & 54 \
\hline \text { Rent Expense } & 56 \
\hline
\end{array}$$ ?
Page 3 of the journal contains the following entry:
Prepaid Insurance........1,530
Cash.............................1,530
-The chart of accounts for Miguel Company includes the following:? $$\begin{array} { | l | c | } 
\hline { \text { Account Name } } & \text { Account Number } \
\hline \text { Cash } & 11 \
\hline \text { Accounts Receivable } & 13 \
\hline \text { Prepaid Insurance } & 15 \
\hline \text { Accounts Payable } & 21 \
\hline \text { Unearned Revenue } & 24 \
\hline \text { Miguel, Capital } & 31 \
\hline \text { Miguel, Drawing } & 32 \
\hline \text { Fees Earned } & 41 \
\hline \text { Salaries Expense } & 54 \
\hline \text { Rent Expense } & 56 \
\hline
\end{array}$$ Page 3 of the journal contains the following transaction: $$\begin{array} { | c | r | r | } 
\hline \text { Cash } & 640 & \
\hline \text { Fees Earned } & & 640 \
\hline
\end{array}$$ ?What posting references will be found in the journal entry?

Accepted Answer

A)  41, 3 
B)  3, 11 
C)  11, 41 
D)  11, 3

Question 13

Which of the following statements is not a purpose for the journal?

Accepted Answer

A)  to show increases and decreases in accounts 
B)  to show a chronological order by date 
C)  to show a complete transaction in one place 
D)  to help locate errors

Question 14

The chart of accounts for Corning Company includes the following:
 $$\begin{array} { | l | c | } 
\hline{ \text { Account Name } } & \text { Account Number } \
\hline \text { Cash } & 11 \
\hline \text { Accounts Receivable } & 13 \
\hline \text { Prepaid Insurance } & 15 \
\hline \text { Accounts Payable } & 21 \
\hline \text { Unearned Revenue } & 24 \
\hline \text { Corning Capital } & 31 \
\hline \text { Corning Drawing } & 32 \
\hline \text { Fees Earned } & 41 \
\hline \text { Salaries Expense } & 54 \
\hline \text { Rent Expense } & 56 \
\hline
\end{array}$$ ?
Page 3 of the journal contains the following entry:
Prepaid Insurance........1,530
Cash.............................1,530
-What is the posting reference that will be found in the cash account?

Accepted Answer

A)  11 
B)  15 
C)  3 
D)  13

Question 15

A group of related accounts that make up a complete unit is called a trial balance.

Accepted Answer

A) True 
 B)False

Question 16

Joshua Scott invests $40,000 into his new business. How would this transaction be entered in the journal in good form?

Accepted Answer

The answer of Joshua Scott invests $40,000 into his new...

Question 17

Liabilities are debts owed by the business entity.

Accepted Answer

A) True 
 B)False

Question 18

Even when a trial balance is in balance, there may be errors in the individual accounts.

Accepted Answer

A) True 
 B)False

Question 19

The erroneous moving of an entire number one or more spaces to the right or left, such as writing $85 as $850, is called a transposition.

Accepted Answer

A) True 
 B)False

Question 20

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing and therefore should be equal.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing Transactions

Which of the following is true regarding normal balances of accounts?

On January 7, Damien Lawson invests $45,000 to initiate the operation of his business, JumpStart. Provide the journal entry for this transaction.

On January 8, Damien Lawson transfers ownership of several pieces of office equipment to his new business, JumpStart. When new, these items were worth $72,500. The fair market value of the equipment is $60,000. Journalize this transfer.

An overpayment error was discovered in computing and paying the wages of a Jamison Tree Trimming employee. When Jamison receives cash from the employee for the amount of the overpayment, which of the following entries will Jamison make?

In which order are the accounts listed in the chart of accounts?

The recording of cash payments from the cash account is done by entering the amount as a credit.

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Balance entered in wrong column or omitted

Which of the following abbreviations is correct?

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Accounts are records of increases and decreases in individual financial statement items.

If the two totals of a trial balance are not equal, it could be due to

Which of the following statements is not a purpose for the journal?

A group of related accounts that make up a complete unit is called a trial balance.

Joshua Scott invests $40,000 into his new business. How would this transaction be entered in the journal in good form?

Liabilities are debts owed by the business entity.

Even when a trial balance is in balance, there may be errors in the individual accounts.

The erroneous moving of an entire number one or more spaces to the right or left, such as writing $85 as $850, is called a transposition.

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing and therefore should be equal.