Question 1

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

Accepted Answer

A) True 
 B)False

Question 2

Drew Castle is an insurance appraiser. Shown below are (a)several accounts in his ledger with each account preceded by an identification number, and (b)several transactions completed by Castle. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
$\begin{array} { l l}
 \text {1. Accounts Payable }& \text { 8. Office Supplies Expense} \
 \text {2. Accounts Receivable }& \text {9. Prepaid Insurance } \
 \text {3. Appraisal Fees Earned }& \text {10. Salaries Expense } \
 \text {4. Cash }& \text {11. Telephone Expense } \
 \text {5. Insurance Expense }& \text { 12. Unearned Appraisal Fees} \
 \text {6. Office Equipment }& \text { 13. Drew Castle, Capital} \
 \text { 7. Office Supplies}& \text {14. Drew Castle, Withdrawals } \
\end{array}$

$\begin{array} { ll  }
& \text {Example: } \
& \text {Completed an appraisal tor a client who promised to } \
& \text {pay at a later date. } \
& \text {Received cash in advance for appraising a hail damage } \
 \text { A.}& \text { claim} \
& \text {Purchased office supplies on credit } \
 \text { B.}& \text {Drew Castle used cash from the business to pay his  } \
& \text {home telephone bill. There were no business calls on } \
 \text { C.}& \text { the bill.} \
& \text {Received the telephone bill of the business and  } \
 \text {D. }& \text {immediately paid it } \ \text {E. }& \text { Paid the salary of the office assistant.} \
 \text {F. }& \text { Paid for the supplies purchased in transaction} \&B\
 \text {G. }& \text { Completed an sppraisal for a client and immediately } \
& \text {collected cash for the work done. } \

\end{array}$

$\begin{array}{c|c}
\hline \text { Debit } & \text { Credit } \
\hline & \
\hline 2 & 3 \\hline & \\hline & \\hline & \\hline & \\hline & \\hline & \
\hline
\end{array}$

Accepted Answer

The answer of Drew Castle is an insurance appraiser. Shown...

Question 3

The higher a company's debt ratio, the lower the risk of a company not being able to meet its obligations.

Accepted Answer

A) True 
 B)False

Question 4

The record of all accounts and their balances used by a business is called a:

Accepted Answer

A) Balance column journal. 
B) Ledger (or General Ledger). 
C) General Journal. 
D) Book of original entry. 
E) Journal.

Question 5

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
A)
$\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Unearned Catering Revenue } & & 800 \
\hline
\end{array}$
B)
$\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$
C)
$\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Accounts Receivable } & & 800 \
\hline
\end{array}$
D)
$\begin{array}{|l|r|r|}
\hline \text { Unearned Catering Revenue } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$
$$\begin{array}{l}
\text { E) }\
\begin{array} { | l | r | r | } 
\hline \text { Cash } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}
\end{array}$$

Accepted Answer

The answer of ABC Catering received $800 cash from a...

Question 6

Booth Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

Accepted Answer

A) True 
 B)False

Question 7

Review the transactions below and identify with an "X" those that would be posted as a credit in the ledger (The first one has been done for you):
 _ X_ 1. Salary Payable was increased.
_____2. Cash was decreased
_____3. Equipment was increased
_____4. Owner, Capital was increased
_____5. Salaries Expense was increased
_____6. Accounts Receivable was decreased
_____7. Unearned Revenue was increased
_____8. Owner, Withdrawals was increased
_____9. Supplies was increased
. Building was increased
. Utilities Expense was increased
2. Service Revenue was increased

Accepted Answer

The answer of Review the transactions below and identify with...

Question 8

The balance sheet reports the financial position of a company at a point in time.

Accepted Answer

A) True 
 B)False

Question 9

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

Accepted Answer

A) True 
 B)False

Question 10

Identify the statement below that is correct.

Accepted Answer

A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense. 
B) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
C) Promises of future payment by the customer are called accounts receivable. 
D) Accrued liabilities include accounts receivable. 
E) Increases and decreases in cash are always recorded in the owner's capital account.

Question 11

A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?

Accepted Answer

A) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800. 
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800. 
C) Debit Cash, $1,800; credit Accounts Receivable, $1,800. 
D) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800. 
E) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.

Question 12

The chronological record of each complete transaction that has occurred is called the:

Accepted Answer

A) Journal. 
B) Trial balance. 
C) Ledger. 
D) Account balance. 
E) Cash account.

Question 13

Match between columns
                        Premises: Prepaid Insurance
Owner, Capital
Office Furniture
Fees Revenue
Equipment
Salary Expense
Cash
Unearned Revenue
Accounts Receivable
Accounts Payable
Supplies
Owner, Withdrawals

Accepted Answer

The Answer of asset and liability and expense and equity is...

Question 14

On February 5, Teddy's Catering purchased an oven that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction.

Accepted Answer

The answer of On February 5, Teddy's Catering purchased an...

Question 15

A company's list of accounts and the identification numbers assigned to each account is called a:

Accepted Answer

A) General Journal. 
B) Source document. 
C) Trial balance. 
D) Chart of accounts. 
E) Journal.

Question 16

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

Accepted Answer

A) True 
 B)False

Question 17

Posting is the transfer of journal entry information to the ledger.

Accepted Answer

A) True 
 B)False

Question 18

Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Accepted Answer

A) Debit Accounts payable, $500; credit Office supplies, $500. 
B) Debit Cash, $500; credit Office supplies, $500. 
C) Debit Office supplies, $500; credit Accounts payable, $500. 
D) Debit Office supplies, $500; credit Cash, $500. 
E) Debit Office supplies expense, $500; credit Cash, $500.

Question 19

The general journal is known as the book of final entry because financial statements are prepared from it.

Accepted Answer

A) True 
 B)False

Question 20

Prepaid accounts (also called prepaid expenses)are generally:

Accepted Answer

A) Decreases in equity. 
B) Payments made for products and services that never expire. 
C) Promises of payments by customers. 
D) Classified as liabilities on the balance sheet. 
E) Assets that represent prepayments of future expenses.

Exam 2: Analyzing and Recording Transactions

A transaction that decreases a liability and increases an asset must also affect one or more other accounts.

The higher a company's debt ratio, the lower the risk of a company not being able to meet its obligations.

The record of all accounts and their balances used by a business is called a:

Booth Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

The balance sheet reports the financial position of a company at a point in time.

A general journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

Identify the statement below that is correct.

A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?

The chronological record of each complete transaction that has occurred is called the:

Identify each of the following accounts. Match of the following

On February 5, Teddy's Catering purchased an oven that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction.

A company's list of accounts and the identification numbers assigned to each account is called a:

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

Posting is the transfer of journal entry information to the ledger.

Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

The general journal is known as the book of final entry because financial statements are prepared from it.

Prepaid accounts (also called prepaid expenses) are generally: