Question 1

Rocky Industries received its telephone bill in the amount of $300 and immediately paid it.Rocky's journal entry to record this transaction will include a

Accepted Answer

A) Debit to Telephone Expense for $300. 
B) Credit to Accounts Payable for $300. 
C) Debit to Cash for $300. 
D) Credit to Telephone Expense for $300. 
E) Debit to Accounts Payable for $300.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Prepaid expenses are:

Accepted Answer

A) Payments made for products and services that do not ever expire. 
B) Classified as liabilities on the balance sheet. 
C) Decreases in retained earnings. 
D) Assets that represent prepayments of future expenses. 
E) Promises of payments by customers.

Question 4

A sales invoice:

Accepted Answer

A) Is a type of use document. 
B) Is a source document. 
C) Is not needed by buyers. 
D) Gives rise to an entry in the accounting process. 
E) Is not necessary in accounting.

Question 5

Describe source documents and their purpose.

Accepted Answer

The answer of Describe source documents and their purpose....

Question 6

Flora Accounting Services completed these transactions in February:
a.Purchased office supplies on account, $300.
b.Completed work for a client on credit, $500.
c.Paid cash for the office supplies purchased in (a).
d.Completed work for a client and received $800 cash.
e.Received $500 cash for the work described in (b).
f.Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions.Explanations are not necessary.

Accepted Answer

The answer of Flora Accounting Services completed these transactions in...

Question 7

According to the seller, a customer's promise to pay is called an account payable.

Accepted Answer

A) True 
 B)False

Question 8

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

Accepted Answer

The answer of _________________ identify and describe transactions and events...

Question 9

During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600.The February 28 cash balance was $1,800.What was the January 31 beginning cash balance?

Accepted Answer

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

Question 10

Which of the following statements is false with regard to the debt ratio?

Accepted Answer

A) It is of use to both internal and external users of accounting information. 
B) A relatively high ratio is always desirable. 
C) The dividing line for a high and low ratio varies from industry to industry. 
D) Many factors such as the company's age, stability, profitability, and cash flow influence the determination of what would be interpreted as a high versus a low ratio. 
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Question 11

Listed below are two pieces of information.Where is the best place to locate this information, in the journal or the ledger? 1.Details of a transaction that took place on October 3.
2)All of the sales activity that took place during the current month.

Accepted Answer

A) 1.Journal 2.Journal 
B) 1.Journal 2.Ledger 
C) 1.Ledger 2.Ledger 
D) 1.Ledger 2.Journal 
E) This information is only available on the financial statements.

Question 12

As prepaid expenses are used up, the costs of these assets become expenses.

Accepted Answer

A) True 
 B)False

Question 13

A ledger is:

Accepted Answer

A) A record containing all accounts (with amounts)for a business. 
B) A journal in which transactions are first recorded. 
C) A collection of documents that describe transactions and events during the accounting process. 
D) A list of all accounts with their debit balances at a point in time. 
E) A list of all accounts a company uses and includes an identification number assigned to each account.

Question 14

The balances for the accounts of Lance's Consulting Firm, Inc.for the year ended December 31 are shown below.Each account shown had a normal balance.
$\begin{array}{lrlr}
\text { Accounts payable } & \$ 6,400 & \text { Wages expense } & \$ 35,000 \
\text { Accounts receivable } & 7,000 & \text { Rent expense } & 5,000 \
\text { Cash } & 10,000 & \text { Retained earnings } & 68,700 \
\text { Office supplies } & 1,000 & \text { Land } & 53,000 \
\text { Building } & 99,000 & \text { Unearned revenue } & 7,000 \
\text { Supplies expense } & 15,000 & \text { Dividends } & 20,000 \
\text { Consulting revenue } & 150,000 & \text { Common stock } & 12,900
\end{array}$
Calculate ending retained earnings.

Accepted Answer

The answer of The balances for the accounts of Lance's...

Question 15

Stride Rite had total liabilities of $130 million and total assets of $375 million.Its debt ratio was _______________.

Accepted Answer

The answer of Stride Rite had total liabilities of $130...

Question 16

Which of the following is a true statement regarding debits and credits?

Accepted Answer

A) If a company earned a profit, debits will not equal credits. 
B) For a business, debits are better than credits. 
C) A company's books are not in balance if they have a current period loss. 
D) Assets and expenses are both increased with a debit. 
E) Liabilities and equity are both increased with a debit.

Question 17

A report that lists 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 18

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following statements 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) Promises of future payment are called accounts payable. 
C) Increases and decreases in cash are always recorded in the retained earnings account. 
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business. 
E) Liabilities include accounts receivable.

Question 20

Which of the following list of events properly reflects the early steps taken in the accounting process?

Accepted Answer

A) Record relevant transactions, post journal information to ledger accounts, analyze each transaction, and prepare and analyze the trial balance. 
B) Post journal information to ledger accounts, analyze each transaction, post journal information to ledger accounts, and prepare and analyze the trial balance. 
C) Prepare and analyze the trial balance, analyze each transaction, post journal information to ledger accounts, record relevant transactions. 
D) Analyze each transaction, post journal information to ledger accounts, record relevant transactions, and prepare and analyze the trial balance. 
E) Analyze each transaction, record relevant transactions, post journal information to ledger accounts, and prepare and analyze the trial balance.

Exam 15: Basic Accounting for Transactions

Rocky Industries received its telephone bill in the amount of $300 and immediately paid it.Rocky's journal entry to record this transaction will include a

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

Prepaid expenses are:

A sales invoice:

Describe source documents and their purpose.

According to the seller, a customer's promise to pay is called an account payable.

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

During the month of February, Hoffer Company had cash receipts of $7,500 and cash disbursements of $8,600.The February 28 cash balance was $1,800.What was the January 31 beginning cash balance?

Which of the following statements is false with regard to the debt ratio?

Listed below are two pieces of information.Where is the best place to locate this information, in the journal or the ledger? 1.Details of a transaction that took place on October 3. 2) All of the sales activity that took place during the current month.

As prepaid expenses are used up, the costs of these assets become expenses.

A ledger is:

Stride Rite had total liabilities of $130 million and total assets of $375 million.Its debt ratio was _______________.

Which of the following is a true statement regarding debits and credits?

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

Double-entry accounting requires that the impact of each transaction be recorded in at least two accounts.

Which of the following statements is correct?

Which of the following list of events properly reflects the early steps taken in the accounting process?