Question 1

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Accepted Answer

A)  Supplies, understated $130; Fees Earned, overstated $130. 
B)  Supplies, understated $260; Fees Earned, overstated $130. 
C)  Supplies, overstated $130; Fees Earned, overstated $130. 
D)  Supplies, overstated $130; Fees Earned, understated $130. 
E)  Supplies, overstated $260; Fees Earned, understated $130.

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)  $\begin{array} { | l | r | r | } 
\hline \text { Unearned Catering Reverue } & 1,000 \
\hline \text { Catering Reverue } & & 1,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | l | r | r | } 
\hline \text { Catering Reverue } & 1,000 \
\hline \text { Accourts Receivable } & & 1,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,000 \
\hline \text { Unearned Catering Reverue } & & 1,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,000 \
\hline \text { Catering Reverue } & & 1,000 \
\hline
\end{array}$ 
E)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$

Question 3

Mary Martin, the sole stockholder of Martin Consulting, started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction.

Accepted Answer

A)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 40,000 & \
\hline \text { Corrmon Stock } & & 40,000 \
\hline
\end{array}$ 
B)  $\begin{array} { | l | r | r | } 
\hline \text { Corrunon Stock } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | l | r | r | } 
\hline \text { Irvestrnents } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$ 
D)  $\begin{array} { | l | r | r | } 
\hline \text { Irvestrnents } & 40,000 & \
\hline \text { Corrmon Stock } & & 40,000 \
\hline
\end{array}$ 
E)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 40,000 \
\hline \text { Ircreased Equity } & & 40,000 \
\hline
\end{array}$

Question 4

Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

Accepted Answer

A)  $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Accounts Payable } & & 300 \
\hline
\end{array}$ 
B)  $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 300 \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$ 
C)  $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Dividends } & & 300 \
\hline
\end{array}$ 
D)  $\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 300 & \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$ 
E)  $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Cash } & & 300 \
\hline
\end{array}$

Question 5

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):

Accepted Answer

A)  Account. 
B)  Trial balance. 
C)  Journal. 
D)  T-account. 
E)  Balance column account.

Question 6

An income statement is also called an earnings statement, a statement of operations or a profit and loss statement.

Accepted Answer

A) True 
 B)False

Question 7

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 8

A debit is used to record an increase in all of the following accounts except:

Accepted Answer

A)  Supplies 
B)  Cash 
C)  Accounts Payable 
D)  Dividends 
E)  Prepaid Insurance

Question 9

"Unearned" accounts are liabilities that must be fulfilled.

Accepted Answer

A) True 
 B)False

Question 10

Identify the statement below that is incorrect.

Accepted Answer

A)  The normal balance of accounts receivable is a debit. 
B)  The normal balance of dividends is a debit. 
C)  The normal balance of unearned revenues is a credit. 
D)  The normal balance of an expense account is a credit. 
E)  The normal balance of the common stock account is a credit.

Question 11

At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Accepted Answer

A)  300%. 
B)  33.3%. 
C)  75.0%. 
D)  66.67%. 
E)  $400,000.

Question 12

Describe what source documents are and the purpose they serve in a business.

Accepted Answer

The answer of Describe what source documents are and the...

Question 13

Which of the following is NOT an asset account:

Accepted Answer

A)  Cash 
B)  Land 
C)  Services Revenue 
D)  Buildings 
E)  Equipment

Question 14

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.

Accepted Answer

A)  $\begin{array} { | l | r | r | } 
\hline \text { Accounts receivable } & 12,000 & \
\hline \text { Cash} & & 12,000 \
\hline
\end{array}$ 
B)  $\begin{array}{|l|r|r|}
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting servicesrevenue } & & 12,000 \
\hline
\end{array}$ 
C)  $\begin{array} { | l | l | l | } 
\hline \text { Consulting services revenue } & 12,000 \
\hline \text { Cash } & & 12,000\
\hline
\end{array}$ 
D)  $\begin{array}{|l|r|r|}
\hline \text { Accounts payable } & 12,000 & \
\hline \text { Consulting servicesrevenue } & & 12,000 \
\hline
\end{array}$ 
E)  $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting servicesrevenue } & & 12,000 \
\hline
\end{array}$

Question 15

Indicate on which of the financial statements the following items appears. Use I for income statement, RE for statement of retained earnings, and B for balance sheet. More than one statement may be appropriate for some items.
 $$\begin{array} {| l | l| } 
\hline \text { a. Fees Earned } &\quad\quad\quad\quad\quad\quad\quad \
\hline \text { b. Cash } & \
\hline \text { c. Unearned Revenue } & \
\hline \text { d. Rent expense } & \
\hline \text { e. Owner, Capital } & \
\hline \text { f. Notes Payable } & \
\hline \text { g. Prepaid Rent } & \
\hline \text { h. Salaries Expense } & \
\hline \text { i.Notes Payable } & \
\hline \text { j.Owner, Withdrawal }&\
\hline
\end{array}$$

Accepted Answer

The answer of Indicate on which of the financial statements...

Question 16

Revenues always increase equity.

Accepted Answer

A) True 
 B)False

Question 17

The numbering system used in a company's chart of accounts:

Accepted Answer

A)  Is the same for all companies. 
B)  Is determined by generally accepted accounting principles. 
C)  Depends on the source documents used in the accounting process. 
D)  Typically begins with balance sheet accounts. 
E)  Typically begins with income statement accounts.

Question 18

At year-end, Henry Laundry Service noted the following errors in its trial balance:
1. It understated the total debits to the Cash account by $500 when computing the account balance.
2. A credit sale for $311 was recorded as a credit to the revenue account, but the offsetting debit was not posted.
3. A cash payment to a creditor for $2,600 was never recorded.
4. The $680 balance of the Prepaid Insurance account was listed in the credit column of the trial balance.
5. A $24,900 van purchase was recorded as a $24,090 debit to Equipment and a $24,090 credit to Notes Payable.
6. A purchase of office supplies for $150 was recorded as a debit to Office Equipment. The offsetting credit entry was correct.
7. An additional investment of $4,000 by the stockholder was recorded as a debit to Common Stock and as a credit to Cash.
8. The cash payment of the $510 utility bill for December was recorded (but not paid) twice.
9. The revenue account balance of $79,817 was listed on the trial balance as $97,817.
10. A $1,000 cash dividend was recorded as a $100 debit to Dividends and $100 credit to Cash.
143.
Using the form below, indicate whether each error would cause the trial balance to be out of balance, the amount of any imbalance, and whether a correcting journal entry is required.
 $\begin{array}{|l|c|c|c|}
\hline  \quad \quad \quad  &\text {Would the error }&\
 &\text {cause the trial }&&  \text {Correcting }\
 &\text {balance to be out } & \text { Amount of }&\quad  \text {Journal Entry}  \
 &\text {of balance?} &\text { Imbalance}&  \text {Reguired} \
\end{array}$
$\begin{array}{|r|l|l|l|l|l|}
\hline \text { Error } &   \quad\quad\text { Yes }& \quad\text { No } & \quad \quad \quad \quad\quad& \quad\text { Yes }&\quad\text { No } \
\hline 1 & \
\hline 2 & \
\hline 3 & \
\hline 4 & \
\hline 5 & \
\hline 6 & \
\hline 7 & \
\hline 8 & \
\hline 9 & \
\hline 10 & \
\hline
\end{array}$

Accepted Answer

The answer of At year-end, Henry Laundry Service noted the...

Question 19

A credit is used to record an increase in all of the following accounts except:

Accepted Answer

A)  Accounts Payable 
B)  Service Revenue 
C)  Unearned Revenue 
D)  Wages Expense 
E)  Common Stock

Question 20

A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction:

Accepted Answer

A)  Credit another asset account for $1,500. 
B)  Credit another liability account for $1,500. 
C)  Credit a revenue account for $1,500. 
D)  Credit the common stock account for $1,500. 
E)  Debit another asset account for $1,500.

Exam 15: Analyzing for Business Transactions

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

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.

Mary Martin, the sole stockholder of Martin Consulting, started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting will make to record the transaction.

Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n) :

An income statement is also called an earnings statement, a statement of operations or a profit and loss statement.

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?

A debit is used to record an increase in all of the following accounts except:

"Unearned" accounts are liabilities that must be fulfilled.

Identify the statement below that is incorrect.

At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Describe what source documents are and the purpose they serve in a business.

Which of the following is NOT an asset account:

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.

Revenues always increase equity.

The numbering system used in a company's chart of accounts:

A credit is used to record an increase in all of the following accounts except:

A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction: