Question 1

The bookkeeper for B. Sebastian & Company, Inc. prepared the following journal entries and posted the entries to the general ledger as indicated in the T accounts presented. Assume that the dollar amounts and the descriptions of the entries are correct.
Journal entries:  Payment is made for the office furniture bill received on May 15.  See the journal entries and T accounts for B. Sebastian & Company.
REQUIRED: If you assume that all journal entries have been posted correctly, use the above information to answer these questions:
1 Identify the transactions that the bookkeeper recorded incorrectly in the general journal.
2 Prepare the journal entry that the bookkeeper should have made for each transaction that you have identified as being made incorrectly.
3 For each journal entry recorded incorrectly, indicate the impact of the error on the accounting equation. For your answer, indicate whether each element of the accounting equation, Assets, Liabilities, and Stockholders' Equity, has been "Understated" or "Overstated" or there has been "No Effect."

Accepted Answer

The answer of The bookkeeper for B. Sebastian & Company,...

Question 2

Several events are listed below. Indicate whether each event is an external event that should be recorded as a transaction, an internal event which should be recorded as a transaction, or an event which should not be recorded. Use the following identification codes for your answers:
E - External event to be recorded as a transaction I - Internal event to be recorded as a transaction NR - An event which should NOT be recorded
_____ A An order is placed with a supplier for merchandise.
_____ B Common stock is issued to investors.
_____ C Cash sales are made.
_____ D Raw materials are entered into production.
_____ E Federal income tax returns are prepared by the company's accountant.
_____ F Bills are received for utility expenses.
_____ G Payment is received from customers to whom merchandise had been sold on credit.
_____ H Money collected from cash and credit customers is deposited in the company's checking account at a local bank.

Accepted Answer

The answer of Several events are listed below. Indicate whether...

Question 3

For each of the following accounts, indicate whether it is a balance sheet account or an income statement account.
-Sales Revenue

Accepted Answer

A) Balance sheet account 
B) Income statement account

Question 4

Identify which of the following would be recorded as external events, recorded as internal events, or not recorded.
-The company signs a contract with the marketing firm and pays a retainer.

Accepted Answer

A) Internal event 
B) External event 
C) Not recorded

Question 5

Which of the following events transactions is an internal event for a business entity?

Accepted Answer

A)  An accountant provides services for clients. 
B)  An accountant purchases computer equipment to maintain business records and prepare legal documents. 
C)  Periodically, part of the cost of the computer equipment used by an accountant is assigned to depreciation expenses. 
D)  An accountant receives cash payments from clients who were billed for services.

Question 6

An is a chronological record of all transactions entered into by a business.

Accepted Answer

The answer of An is a chronological record of all...

Question 7

Parachute Country Club
Use the selected accounts for Parachute Country Club presented below to answer the following questions. 
-Read the information for Parachute Country Club. On which date did the country club make a credit sale of club memberships?

Accepted Answer

A)  August 2 
B)  August 3 
C)  August 5 
D)  August 7

Question 8

Refer to the transactions for Terry Company.
Use the transactions incurred by the Terry Corporation to set up T accounts and post each transaction to the T accounts.

Accepted Answer

The answer of Refer to the transactions for Terry Company.
Use...

Question 9

The following list of accounts was taken from the general ledger of Bassett Corporation on December 31, 2015.
The bookkeeper thought it would be helpful if the accounts were arranged in alphabetical order. Each account contains the balance that is normal for that type of account; for example, Cash normally has a debit balance. Prepare a trial balance as of this date with the accounts arranged in the following order: 1 assets, 2 liabilities, 3 stockholders' equity, 4 revenues, 5 expenses, and 6 dividends.

Accepted Answer

The answer of The following list of accounts was taken...

Question 10

Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all.
-Amounts owed on an open account to a vendor, due in 70 days

Accepted Answer

A) Cash 
B) Prepaid Asset 
C) Investments 
D) Taxes Payable 
E) Preferred Stock
F)Accounts Receivable
G)Land
H)Accounts Payable
I)Retained Earnings
J)Notes Receivable
K)Buildings
L)Notes Payable
M)Common Stock

Question 11

Blecker Corp. made cash sales to customers. What effect does this transaction have on the accounting equation?

Accepted Answer

A)  Liabilities increase and stockholders' equity increases. 
B)  There is no effect on the accounting equation as one asset account increases while another asset account decreases. 
C)  Assets increase and liabilities increase. 
D)  Assets increase and stockholders' equity increases.

Question 12

The correct term for the process of recording the economic effects of business transactions in a book of original entry is:

Accepted Answer

A)  Double-entry system. 
B)  Debit. 
C)  Credit. 
D)  Journalizing.

Question 13

Under the cost principle, assets are always carried at their current market value.

Accepted Answer

A) True 
 B)False

Question 14

An is a numerical list of all of the accounts used by an entity.

Accepted Answer

The answer of An is a numerical list of all...

Question 15

All of the following are external events transactions except for:

Accepted Answer

A)  a department store recognizing losses from shoplifting. 
B)  a department store running ads in a local newspaper. 
C)  a department store purchasing merchandise from a clothing manufacturer. 
D)  a department store selling clothing to customers on credit.

Question 16

Four journal entries are presented below. Write an explanation for each entry in the space provided below the entry.

Accepted Answer

The answer of Four journal entries are presented below. Write...

Question 17

You have just taken a job as the accountant for a stucco repair firm whose accounting year ends on December 31.
As part of the management team, you receive a year­end bonus directly related to the firm's earnings for the year. One of your duties is to review the journal entries recorded by the bookkeepers. A new bookkeeper prepared the following journal entry:  To record deposit from client.
You notice that the explanation for the journal entry refers to the amount as a deposit, and the bookkeeper explains to you that the firm plans to provide the services to the client in March of the following year.
Required
1. Did the bookkeeper prepare the correct journal entry to account for the client's deposit? Explain your answer.
2. What is your responsibility in this situation as the new accountant for the firm? Explain your answer.

Accepted Answer

The answer of You have just taken a job as...

Question 18

Which of the following accounts is increased by a debit entry?

Accepted Answer

A)  Common Stock Capital Stock 
B)  Equipment 
C)  Unearned Subscription Revenue 
D)  Notes Payable

Question 19

Choose from the following list of account titles the one that most accurately fits the description of that account or is an example of that account. An account title may be used more than once or not at all.
-A plot of land held for speculation

Accepted Answer

A) Cash 
B) Prepaid Asset 
C) Investments 
D) Taxes Payable 
E) Preferred Stock
F)Accounts Receivable
G)Land
H)Accounts Payable
I)Retained Earnings
J)Notes Receivable
K)Buildings
L)Notes Payable
M)Common Stock

Question 20

The payment of salaries and wages decreases cash and increases an .

Accepted Answer

The answer of The payment of salaries and wages decreases...

Exam 3: Processing Accounting Information

For each of the following accounts, indicate whether it is a balance sheet account or an income statement account. -Sales Revenue

Identify which of the following would be recorded as external events, recorded as internal events, or not recorded. -The company signs a contract with the marketing firm and pays a retainer.