Question 1

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 2

If Taylor Willow,the sole stockholder of Willow Hardware,uses cash of the business to purchase a family automobile,the business should record this use of cash with an entry to:

Accepted Answer

A)  Debit Salary Expense and credit Cash. 
B)  Debit Cash and credit Salary Expense. 
C)  Debit Cash and credit Dividends. 
D)  Debit Dividends and credit Cash. 
E)  Debit Automobiles and credit Cash.

Question 3

A company provided $12,000 of consulting services,and was immediately paid in cash by the customer.Identify the journal entry below that properly records this transaction.

Accepted Answer

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

Question 4

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 5

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 6

Which of the following is NOT an asset account:

Accepted Answer

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

Question 7

Revenues and expenses are two categories of ________ accounts.

Accepted Answer

The answer of Revenues and expenses are two categories of...

Question 8

Identify the correct formula below used to calculate the debt ratio.

Accepted Answer

A)  Total Equity/Total Liabilities. 
B)  Total Liabilities/Total Equity. 
C)  Total Liabilities/Total Assets. 
D)  Total Assets/Total Liabilities. 
E)  Total Equity/Total Assets.

Question 9

Identify the following accounts as appearing on either the Income Statement (IS) or Balance Sheet (BS).
-Accounts Payable

Accepted Answer

A) BS 
B) IS

Question 10

A balanced trial balance is proof that no errors were made in journalizing transactions,posting to the ledger,and preparing the trial balance.

Accepted Answer

A) True 
 B)False

Question 11

Items such as sales tickets,bank statements,checks,and purchase orders are examples of a business's source documents.

Accepted Answer

A) True 
 B)False

Question 12

Drew Castle is an insurance appraiser.Shown below are (a)several accounts in his ledger with each account preceded by an identification number,and (b)several transactions completed by Castle.Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
 1. Accounts Payable
2. Accounts Receivable
3. Appraisal Fees Earned
4. Cash
5. Insurarice Expense
6. Office Equipment
7. Office Supplies
8. Office Supplies Expense
9. Prepaid Insurance
10. Salaries Expense
11. Telephone Expense
12. Unearned Appraisal Fees
13. Common Stock
14. Dividends

Accepted Answer

The answer of Drew Castle is an insurance appraiser.Shown below...

Question 13

At a given point in time,a business's trial balance is a list of all of its general ledger accounts and their balances.

Accepted Answer

A) True 
 B)False

Question 14

Identify each of the following accounts as a revenue (R), expense (E), asset (A), liability (L), or equity (SE).
-Equipment

Accepted Answer

A) L 
B) SE 
C) R 
D) E 
E) A

Question 15

Identify each of the following accounts as a revenue (R), expense (E), asset (A), liability (L), or equity (SE).
-Office Furniture

Accepted Answer

A) L 
B) SE 
C) R 
D) E 
E) A

Question 16

Identify each of the following accounts as a revenue (R), expense (E), asset (A), liability (L), or equity (SE).
-Accounts Receivable

Accepted Answer

A) L 
B) SE 
C) R 
D) E 
E) A

Question 17

When a company bills a customer for $700 for services rendered,the journal entry to record this transaction will include a $700 debit to Services Revenue.

Accepted Answer

A) True 
 B)False

Question 18

A journal entry that affects no more than two accounts is called a compound entry.

Accepted Answer

A) True 
 B)False

Question 19

Wiley Hill opened Hill's Repairs on March 1 of the current year.During March,the following transactions occurred and were recorded in the company's books:
Wiley,the sole stockholder,invested $25,000 cash in the business in exchange for common stock.
Wiley contributed $100,000 of equipment to the business in exchange for common stock.
The company paid $2,000 cash to rent office space for the month of March.
The company received $16,000 cash for repair services provided during March.
The company paid $6,200 for salaries for the month of March.
The company provided $3,000 of services to customers on account.
The company paid cash of $500 for utilities for the month of March.
The company received $3,100 cash in advance from a customer for repair services to be provided in April.
The company paid Wiley $5,000 cash as a dividend.
Based on this information,total stockholder's equity reported on the balance sheet at the end of March would be:

Accepted Answer

A)  $133,400. 
B)  $130,300. 
C)  $125,300. 
D)  $8,400. 
E)  $13,500.

Question 20

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

Exam 2: Analyzing for Business Transactions

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?

If Taylor Willow,the sole stockholder of Willow Hardware,uses cash of the business to purchase a family automobile,the business should record this use of cash with an entry to:

A company provided $12,000 of consulting services,and was immediately paid in cash by the customer.Identify the journal entry below that properly records this transaction.

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

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

Which of the following is NOT an asset account:

Revenues and expenses are two categories of ________ accounts.

Identify the correct formula below used to calculate the debt ratio.

Identify the following accounts as appearing on either the Income Statement (IS) or Balance Sheet (BS) . -Accounts Payable

A balanced trial balance is proof that no errors were made in journalizing transactions,posting to the ledger,and preparing the trial balance.

Items such as sales tickets,bank statements,checks,and purchase orders are examples of a business's source documents.

At a given point in time,a business's trial balance is a list of all of its general ledger accounts and their balances.

Identify each of the following accounts as a revenue (R) , expense (E) , asset (A) , liability (L) , or equity (SE) . -Equipment

Identify each of the following accounts as a revenue (R) , expense (E) , asset (A) , liability (L) , or equity (SE) . -Office Furniture

Identify each of the following accounts as a revenue (R) , expense (E) , asset (A) , liability (L) , or equity (SE) . -Accounts Receivable

When a company bills a customer for $700 for services rendered,the journal entry to record this transaction will include a $700 debit to Services Revenue.

A journal entry that affects no more than two accounts is called a compound entry.

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.