Question 1

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year:
$\begin{array}{llcc}
 & \text { Assets} &\text {  Liabilities  }\
 \text { Beginning of the year ............ } &\$114,000& \$68,000\
 \text { End of the year ......................} &135,000&73,000\
\end{array}$

If Jerry invested an additional $12,000 in the business and withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Accepted Answer

The answer of Jerry's Butcher Shop, Inc. had the following...

Question 2

On a trial balance, if the Debit and Credit column totals are equal, then:

Accepted Answer

A)  All transactions have been recorded correctly. 
B)  All entries from the journal have been posted to the ledger correctly. 
C)  All ledger account balances are correct. 
D)  Equal debits and credits have been recorded for transactions. 
E)  The balance sheet would be correct.

Question 3

Match between columns
                        Premises: Ledger
Credit
Account
T-account
Journal
Source documents
Double-entry accounting
Trial balance
Debit
Posting

Accepted Answer

The Answer of A list of accounts and their balances is...

Question 4

An income statement reports the revenues earned less the expenses incurred by a business over a period of time.

Accepted Answer

A) True 
 B)False

Question 5

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

Accepted Answer

A)  A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense. 
B)  A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable. 
C)  A $75 cash receipt from a customer in payment of her 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)  An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.

Question 6

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

Accepted Answer

The answer of Unearned revenue is classified as a(an) _______________...

Question 7

The _______________________ is a record containing all accounts used by a company as well as the transactions and ending balances of each of the accounts.

Accepted Answer

The answer of The _______________________ is a record containing all...

Question 8

Review the transactions below and identify  those that would be posted as a credit in the ledger (The first one has been done for you):

Accepted Answer

A)  Salary Payable was increased. 
B)  Cash was decreased 
C)  Equipment was increased 
D)  Common Stock was increased 
E)  Salaries Expense was increased
F) Accounts Receivable was decreased
G) Unearned Revenue was increased
H) Dividends was increased
I) Supplies was increased
J) Building was increased
K) Utilities Expense was increased
L) Service Revenue was increased

Question 9

Cash paid to stockholders by the business of a corporation and used for personal expenses, should be treated as an expense of the business.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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

Accepted Answer

The answer of A ____________ gives a complete record of...

Question 12

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n):

Accepted Answer

A)  Account balance. 
B)  Trial balance. 
C)  Ledger. 
D)  Chart of accounts. 
E)  General Journal.

Question 13

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

Accepted Answer

A)  The Equipment 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)  The error will overstate the credits listed in the journal.

Question 14

Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:

Accepted Answer

A)  A revenue account. 
B)  The dividends account. 
C)  The common stock account. 
D)  An expense account. 
E)  A liability account.

Question 15

The following trial balance is prepared from the general ledger of HG's Auto Maintenance, Inc. $\begin{array}{c}
 \text {HG'S AUTO MAINTENANCE, Inc.}\
 \text { Trial Balance}\
 \text { October 31}\
\
\begin{array}{lll}
\
\text {Cash}\
\text {Accounts receivable}\
\text {Supplies}\
\text {Shop equipment}\
\text {Office equipment}\
\text {Accounts payable}\
\text {Common stock}\
\text {Dividends}\
\text {Repair fees earned}\
\text {Supplies expense}\
\text {Totals}
\end{array}
\begin{array}{rr}
\text { Debit } & \text { Credit } \
\hline \$ 1,975 & \
2,800 & \
500 & \
13,000 & \
6,600 & \
& \$ 4,510 \
& 22,000 \
4,200 & \
& 11,875 \
8,600 & \
\hline \underline{\$ 37675} &\underline{ \$ 38385 }
\end{array}
\end{array}$
 Because the trial balance did not balance, you decided to examine the accounting records. You found that the following errors had been made:
1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable.
2. An investment of $500 cash by the owner was debited to Common Stock and credited to Cash.
3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted from the computation.
4. One debit of $300 to the Dividends account was posted as a credit.
5. Office equipment purchased for $800 was posted to the Shop Equipment account.
6. One entire entry was not posted to the general ledger. The transaction involved the receipt of $125 cash for repair services performed for cash.
Prepare a corrected trial balance for the HG's Auto Maintenance, Inc.e as of October 31.

Accepted Answer

The answer of The following trial balance is prepared from...

Question 16

At the beginning of the current year, Trenton Company Inc.'s total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in stockholders' equity during the year and total assets at the end of the year were $260,000. Trenton Company's debt ratio at the end of the current year is:

Accepted Answer

A)  70.6%. 
B)  67.3%. 
C)  32.7%. 
D)  48.6%. 
E)  1.42%.

Question 17

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

Accepted Answer

A) True 
 B)False

Question 18

An account balance is:

Accepted Answer

A)  The total of the credit side of the account. 
B)  The total of the debit side of the account. 
C)  The difference between the total debits and total credits for an account including the beginning balance. 
D)  Assets = liabilities + equity. 
E)  Always a credit.

Question 19

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

Accepted Answer

The answer of Jackson Brown Footwear had total liabilities of...

Question 20

Match between columns
                        Premises: To decrease Supplies.
To increase Salaries Expense.
To increase Dividends.
To decrease Accounts Payable.
To increase Common Stock.
To increase Revenue.
To decrease Cash.
To decrease Accounts Receivable.

Accepted Answer

The Answer of Credit and Debit is...

Exam 2: Analyzing for Business Transactions

On a trial balance, if the Debit and Credit column totals are equal, then:

Match the following terms with definitions.

An income statement reports the revenues earned less the expenses incurred by a business over a period of time.

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

The _______________________ is a record containing all accounts used by a company as well as the transactions and ending balances of each of the accounts.

Review the transactions below and identify those that would be posted as a credit in the ledger (The first one has been done for you) :

Cash paid to stockholders by the business of a corporation and used for personal expenses, should be treated as an expense of the business.

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

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

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

Identify the account used by businesses to record the transfer of assets from a business to its owner for personal use:

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

An account balance is:

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

Indicate whether a debit or credit entry would be required to record the following changes in each account.