Question 1

An asset created by prepayment of an insurance expense is:

Accepted Answer

A)  Recorded as a debit to Unearned Revenue. 
B)  Recorded as a debit to Prepaid Insurance. 
C)  Recorded as a credit to Unearned Revenue. 
D)  Recorded as a credit to Prepaid Insurance. 
E)  Not recorded in the accounting records until the insurance period expires.

Question 2

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

Accepted Answer

A)  $\begin{array} { | c | c | c | } 
\hline \text { Unearned Catering Revenue } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | c | c | c | } 
\hline \text { Catering Revenue } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,000 & \
\hline \text { Unearned Catering Revenue } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$

Question 3

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

Accepted Answer

A)  $ 5,000. 
B)  $47,000. 
C)  $52,000. 
D)  $57,000. 
E)  $32,000.

Question 4

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 5

Crediting an expense account decreases it.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are asset accounts except:

Accepted Answer

A)  Accounts Receivable. 
B)  Buildings. 
C)  Supplies expense. 
D)  Equipment. 
E)  Prepaid insurance.

Question 7

___________________ are promises of payment from customers to sellers.

Accepted Answer

The answer of ___________________ are promises of payment from customers...

Question 8

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Accepted Answer

A)  $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$ 
B)  $\begin{array}{|c|r|r|}
\hline \text { Cash } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$ 
C)  $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Accounts Payable } & & 400 \
\hline
\end{array}$ 
D)  $\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$ 
E)  $\begin{array} { | c | r | r | } 
\hline \text { Utilities Payable } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$

Question 9

The purchase of land and buildings will generally be recorded in the same ledger account.

Accepted Answer

A) True 
 B)False

Question 10

A company's ledger is:

Accepted Answer

A)  A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item. 
B)  A journal in which transactions are first recorded. 
C)  A collection of documents that describe transactions and events entering the accounting process. 
D)  A list of all accounts a company uses with an assigned identification number. 
E)  A record containing all accounts and their balances used by the company.

Question 11

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 12

What is a trial balance? What is its purpose?

Accepted Answer

The answer of What is a trial balance? What is...

Question 13

A record containing all the separate accounts for a company as well as all of their balances is called the___________________

Accepted Answer

The answer of A record containing all the separate accounts...

Question 14

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. $\begin{array}{|l|l|cc|}
 \hline \text { Account Title } & \text { Account Type } & \text { Normal Balance } \ 
&&\text { Debit or Credit) }\ 
\hline \text {  a. Prepaid Insurance} & \text {  } & \text {  }\
\hline \text { b. Accounts Payable } & \text {  } & \text {  }\
 \hline\text { c. Common Stock } & \text {  } & \text {  }\
\hline \text {d. Utilities expense  } & \text {  } & \text {  }\
\hline \text {  e. Land} & \text {  } & \text {  }\
 \hline\text { f. Services revenue } & \text {  } & \text {  }\
\hline \text {  g. Notes Receivable} & \text {  } & \text {  }\
\hline \text {  h. Advertising expense} & \text {  } & \text {  }\
 \hline\text { i. Unearned Revenue } & \text {  } & \text {  }\
\hline \text { i. Service Revenue } & \text {  } & \text {  }\
\hline

\end{array}$

Accepted Answer

The answer of For each of the following (1) identify...

Question 15

The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits.

Accepted Answer

A) True 
 B)False

Question 16

For each of the following accounts, identify whether a debit or credit yields the indicated change $\begin{array}{|l|l|}
\hline \text { a. To increase Fees Eamed } &\quad\quad \
\hline \text { b. To decrease Cash } \
\hline \text { c. To decrease Unearned Revenue } \
\hline \text { d. To increase Accounts Receivable } \
\hline \text { e. To increase Common Stock } \
\hline \text { f. To decrease Notes Payable } \
\hline \text { g. To increase Prepaid Rent } \
\hline \text { h. To increase Salaries Expense } \
\hline \text { i. To increase Accounts Payable } \
\hline \text { i. To decrease Prepaid Insurance }\
\hline  
\end{array}$

Accepted Answer

The answer of For each of the following accounts, identify...

Question 17

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then common stock and dividends, followed by revenues and expenses.

Accepted Answer

A) True 
 B)False

Question 18

Dividends paid to the stockholders are a business expense.

Accepted Answer

A) True 
 B)False

Question 19

The right side of an account is called the debit side.

Accepted Answer

A) True 
 B)False

Question 20

The process of transferring general journal entry information to the ledger is called:

Accepted Answer

A)  Double-entry accounting. 
B)  Posting. 
C)  Balancing an account. 
D)  Journalizing. 
E)  Not required unless debits do not equal credits.

Exam 2: Analyzing for Business Transactions

An asset created by prepayment of an insurance expense is:

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Crediting an expense account decreases it.

All of the following are asset accounts except:

___________________ are promises of payment from customers to sellers.

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

The purchase of land and buildings will generally be recorded in the same ledger account.

A company's ledger is:

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

What is a trial balance? What is its purpose?

A record containing all the separate accounts for a company as well as all of their balances is called the___________________

The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits.

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then common stock and dividends, followed by revenues and expenses.

Dividends paid to the stockholders are a business expense.

The right side of an account is called the debit side.

The process of transferring general journal entry information to the ledger is called: