Question 1

Compare the list of accounts below and choose the list that contains only accounts that would be classified as asset accounts on the Chart of Accounts.

Accepted Answer

A)  Accounts Payable; Cash; Supplies. 
B)  Unearned Revenue; Accounts Payable; Dividends. 
C)  Building; Prepaid Insurance; Supplies Expense. 
D)  Cash; Prepaid Insurance; Equipment. 
E)  Notes Payable; Cash; Dividends

Question 2

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

Accepted Answer

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

Question 3

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of BBB Company sends a $2,500 invoice to...

Question 4

A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?

Accepted Answer

A)  $150 understated. 
B)  $135 overstated. 
C)  $150 overstated. 
D)  $15 understated. 
E)  $135 understated.

Question 5

Smiles Entertainment had the following accounts and balances at December 31: $\begin{array}{c}
\begin{array}{|l|}
 \hline \text { Account}\
 \hline \text { Cash}\
 \hline \text { Accounts Receivable}\
 \hline \text {  Prepaid Insurance}\ 
 \hline \text {Supplies.}\
 \hline \text {Accounts Payable}\
 \hline \text {Common Stock}\
 \hline \text {Service Revenue}\
\hline \text {Salaries Expense}\
 \hline \text {Utilities Expense}\
 \hline\text { Totals }\
\hline 
\end{array}
\begin{array}{r|r|}
\hline \text { Debit } & \text { Credit } \
\hline \$ 10,000 & \
\hline 2,000 & \
\hline 2,400 & \
\hline 1,000 & \
\hline & \$ 5,000 \
\hline & 4,900 \
\hline & 7,000 \
\hline 500 & \
\hline 1,000 & \
\hline \underline{\$ 16,900} & \underline{\$ 16,900} \
\hline 
\end{array}
\end{array}$

Using the information in the table, calculate the company's reported net income for the period.

Accepted Answer

A)  $ 1,100 
B)  $ 4,000. 
C)  $ 4,500. 
D)  $10,400. 
E)  $ 5,500

Question 6

Larry Matt, Inc. completed these transactions during December of the current year: \[\begin{array} { | r | l | } 
\hline \text { Dec. } 1 & \begin{array} { l } 
\text { Began a financial services practice by investing } \$ 15,000 \text { cash and office } \
\text { equipment having a } \$ 5,000 \text { value. }
\end{array} \
\hline 2 & \text { Purchased } \$ 1,200 \text { of office equipment on credit. } \
\hline 3 & \text { Purchased } \$ 300 \text { of office supplies on credit. } \
\hline 4 & \text { Completed work for a client and immediately received a payment of } \$ 900 \text { cash. } \
\hline 8 & \text { Completed work for Precept Paper Co. on credit, } \$ 1,700 . \
\hline 10 & \text { Paid for the supplies purchased on credit on December } 3 . \
\hline 14 & \text { Paid for the annual } \$ 960 \text { premium on an insurance policy. } \
\hline 18 & \begin{array} { l } 
\text { Received payment in full from Precept Paper Co. for the work completed on } \
\text { December } 8 .
\end{array} \
\hline 27 & \text { The company paid } \$ 650 \text { cash in dividends to the owner. (sole shareholder) } \
\hline 30 & \text { Paid } \$ 175 \text { cash for the December utility bills. } \
\hline 30 & \text { Received } \$ 2,000 \text { from a client for financial services to be rendered next year. } \
\hline
\end{array}\] Prepare general journal entries to record these transactions.

Accepted Answer

The answer of Larry Matt, Inc. completed these transactions during...

Question 7

Given each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error.
a. $100 debit to Cash was debited to the Cash account twice.
b. $1,900 credit to Sales was posted as a $190 credit.
c. $5,000 debit to Office Equipment was debited to Office Supplies.
d. $625 debit to Prepaid Insurance was posted as a $62.50 debit.
e. $520 credit to Accounts Payable was not posted. $\begin{array}{c}
\begin{array}{lll}
\
 \text { Error}\
 \text { a.}\
 \text { b.}\
 \text { c.}\
 \text { d.}\
 \text { e.}\
\end{array}
\begin{array}{c}
 \text {Amount Out}\
  \text {of Balance}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\end{array}
\begin{array}{c}
  \text {Column Having}\
  \text { Larger Total}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\
\underline{\quad\quad\quad\quad}\

\end{array}
\end{array}$

Accepted Answer

The answer of Given each of the following errors, indicate...

Question 8

A business's source documents may include all of the following except:

Accepted Answer

A)  Sales tickets. 
B)  Ledgers. 
C)  Checks. 
D)  Purchase orders. 
E)  Bank statements.

Question 9

On May 31, the Cash account of Bottle's R US had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?

Accepted Answer

A)  A $0 balance. 
B)  A $4,300 debit balance. 
C)  A $4,300 credit balance. 
D)  A $5,700 debit balance. 
E)  A $5,700 credit balance.

Question 10

A company's formal promise to pay (in the form of a promissory note) a future amount is a(n):

Accepted Answer

A)  Unearned revenue. 
B)  Prepaid expense. 
C)  Credit account. 
D)  Note payable. 
E)  Account receivable.

Question 11

Which financial statement reports an organization's financial position at a single point in time?

Accepted Answer

A)  Income statement. 
B)  Balance sheet. 
C)  Statement of retained earnings. 
D)  Cash flow statement. 
E)  Trial balance.

Question 12

Match between columns
                        Premises: Journal
Debit
Debt ratio
Credit
Balance column account
Ledger
Account balance
Chart of accounts
Trial balance
Note payable

Accepted Answer

The Answer of The ratio of total liabilities to total is...

Question 13

A column in journals and ledger accounts that is used to cross reference journal and ledger entries is the:

Accepted Answer

A)  Account balance column. 
B)  Debit column. 
C)  Posting reference column. 
D)  Credit column. 
E)  Description column.

Question 14

The posting process is the link between the _______________ and the _____________.

Accepted Answer

The answer of The posting process is the link between...

Question 15

To increase an asset account we would _______________ it and to increase a liability account, we would______________ it.

Accepted Answer

The answer of To increase an asset account we would...

Question 16

The debt ratio is calculated by dividing total assets by total liabilities.

Accepted Answer

A) True 
 B)False

Question 17

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Cash } & & 7,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Supplies Experise } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$

Question 18

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Accepted Answer

A)  Dividends account. 
B)  Equity account. 
C)  Drawing account. 
D)  T-account. 
E)  Balance column sheet.

Question 19

During the month of February, Victor Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

Accepted Answer

A)  $700. 
B)  $1,100. 
C)  $2,900. 
D)  $0. 
E)  $4,300.

Question 20

HH Consulting & Design provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries will HH Consulting & Design make to record this transaction?

Accepted Answer

A)  $\begin{array} { | l | r | r | } 
\hline \text { Design Revenue } & 100 & \
\hline \text { Consultirng Revenue } & 800 & \
\hline \text { Accounts Receivable } & & 900 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 800 & \
\hline \text { Design Revenue } & & 100 \
\hline \text { Consulting Revenue } & & 800 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 900 & \
\hline \text { Consultnig Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & 900 & \
\hline \text { Consulting Revenue } & & 800 \
\hline \text { Design Revenue } & & 100 \
\hline
\end{array}$

Exam 2: Analyzing for Business Transactions