Question 1

For what reason do most sellers require customers to have their receipts in order to exchange or return purchased items?

Accepted Answer

A)  The receipt contains coded information which the seller needs to prepare and analyze the trial balance
B)  Sellers wish to ensure that the sale in question was rung up on the register in the first place
C)  This is a legal requirement mandated by a federal law
D)  The receipt is serving as a promissory note
E)  To create an environment in which customer's do not want to return items. B

Question 2

Vicki Lake is a computer consultant.Shown below are (a)several accounts in her ledger with each account preceded by an identification number and (b)several transactions completed by Lake.Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.
 $\begin{array}{|l|l|l|l|}
\hline\text { 1. } & \text { Accounts Payable } & 7 . & \text { Telephone Expense } \
\hline 2 . & \text { Accounts Receivable } & 8 . & \text { Unearned Consulting Fees } \
\hline \text { 3. } & \text { Cash } & 9 . & \text { Common Stock } \
\hline \text { 4. } & \text { Consulting Fees Earned } & 10 . & \text { Dividends } \
\hline \text { 5. } & \text { Office Supplies } & 11 . & \text { Insurance Expense } \
\hline \text { 6. } & \text { Office Supplies Expense } & 12 . & \text { Prepaid Insurance }\
\hline
\end{array}$
 
 $\begin{array}{|l|l|c|c|} 
\hline& & \text { Debit } & \text { Credit } \
\hline & \text { Example } & & \
\hline & \text { Completed consulting work for a client } & 2 & 4 \
\hline \text { A } & \text { Rho will pay at a later date } & & \
\hline & \text { for designing a software package } & & \
\hline \text { B } & \text { Purchased office supplies on credit } & & \
\hline & & & \
\hline \text { C } & \text { Paid for the supplies purchased in B } & & \
\hline & & & \
\hline \text { D } & \text { Received the telephone bill of the business } & & \
\hline & \text { and immediately paid it } & & \
\hline \text { E } & \text { Paid for a 3-year insurance policy } & & \
\hline & & &\
\hline
\end{array}$

Accepted Answer

$$\begin{array} { | c | c | c | } 
\hline & \text { Debit } & \text { Credit } \
\hline \text { A } &  3  & 8 \
\hline \text { B } & 5 & 1 \
\hline \text { C } & 1 & 3  \
\hline \text { D } & 7 &3  \
\hline \text { E } & 12 & 3  \
\hline
\end{array}$$

Question 3

The following transactions occurred during July:
Received $900 cash for services provided to a customer during July.
Received $2,200 cash investment from Barbara Hanson,the owner of the business.
Received $750 from a customer in partial payment of his account receivable,which arose from sales in June.
Provided services to a customer on credit,$375.
Signed a promissory note for a $6,000 bank loan.
Received $1,250 cash from a customer for services to be rendered next year.
What was the amount of revenue for July?

Accepted Answer

A)  $900
B)  $1,275
C)  $2,525
D)  $3,275
E)  $11,100 B

Question 4

A trial balance taken at year-end showed total credits exceeding total debits by $4,950.This discrepancy could have been caused by:

Accepted Answer

A)  An error in the general journal where a $4,950 increase in Accounts Receivable was recorded as an increase in Cash
B)  A net income of $4,950
C)  The balance of $49,500 in Accounts Payable being entered in the trial balance as $4,950
D)  The balance of $5,500 in the Office Equipment account being entered on the trial balance as a debit of $550
E)  An error in the general journal where a $4,950 increase in Accounts Payable was recorded as a decrease in Accounts Payable

Question 5

On December 3,the Matador Company paid $5,400 cash in salaries to office personnel.Prepare the general journal entry to record this transaction.

Accepted Answer

The answer of On December 3,the Matador Company paid $5,400...

Question 6

Land and buildings are generally recorded in the same ledger account.

Accepted Answer

A) True 
 B)False

Question 7

Based on the following trial balance for Sal's Beauty Shop,prepare an income statement,statement of retained earnings and a balance sheet.Sal made no additional investments in the company during the year.
 $\begin{array}{c}
\text { Sal's Beauty Shop}\
\text { Trial Balance}\
\text { December 31}\\begin{array}{|l|r|r|}
\hline \text { Cash } & \$ 6,500 & \
\hline \text { Accounts receivable } & 475 & \
\hline \text { Beauty supplies } & 2,500 & \
\hline \text { Beauty shop equipment } & 17,000 &\
\hline\text { Accounts payable } & & \$ 745 \
\hline \text { Common stock } & & 10,000 \
\hline \text { Retained earnings } & & 11,155 \
\hline \text { Dividends } & 36,000 & \
\hline \text { Revenue earned } & & 72,000 \
\hline \text { Beauty supplies expense } & 3,425 & \
\hline \text { Rent expense } & 6,000 & \
\hline \text { Wages expense } & \underline{22,000} & \
\hline \text { Totals } & \$ 93,900 & \$ 93,900 \
\hline
\end{array}\end{array}$

Accepted Answer

The answer of Based on the following trial balance for...

Question 8

The record in which transactions are first recorded is the:

Accepted Answer

A)  Account balance
B)  Ledger
C)  Journal
D)  Trial balance
E)  Cash account

Question 9

Transactions are first recorded in the ledger.

Accepted Answer

A) True 
 B)False

Question 10

Susie and Katie Shea founded CitySlips.What are some accounting challenges they faced when starting her business?

Accepted Answer

The answer of Susie and Katie Shea founded CitySlips.What are...

Question 11

A general journal is:

Accepted Answer

A)  A ledger in which amounts are posted from a balance column account
B)  Not required if T-accounts are used
C)  A complete record of each transaction in the place from which transaction amounts are posted to the ledger accounts
D)  Not necessary in electronic accounting systems
E)  A book of final entry because financial statements are prepared from it

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

List the steps in processing transactions.

Accepted Answer

The answer of List the steps in processing transactions....

Question 14

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term.

-     The process of transferring journal entry information to the ledger

Accepted Answer

A)   Credit 
B)   Journal 
C)   Account 
D)   Ledger 
E)   Source documents F)  Accounting records G)  Debit H)  T-account I)  Posting J)  Double-entry accounting

Question 15

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term.

-     A file containing all accounts of a company and their balances

Accepted Answer

A)   Credit 
B)   Journal 
C)   Account 
D)   Ledger 
E)   Source documents F)  Accounting records G)  Debit H)  T-account I)  Posting J)  Double-entry accounting

Question 16

Describe source documents and their purpose.

Accepted Answer

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

Question 17

A debit is:

Accepted Answer

A)  An increase in an account
B)  The right-hand side of a T-account
C)  A decrease in an account
D)  The left-hand side of a T-account
E)  An increase to a liability account

Question 18

Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings.This error was not discovered before the journal entry was posted.What is the correcting entry?

Accepted Answer

A)  Debit Buildings and Credit Equipment for $50,000 each
B)  Debit Equipment and Credit Buildings for $50,000 each
C)  Debit Buildings and Credit Equipment for $100,000 each
D)  Debit Equipment and Credit Buildings for $100,000 each
E)  Debit Equipment for $100,000 and Credit Buildings for $50,000

Question 19

Which of the following statements is incorrect?

Accepted Answer

A)  Higher financial leverage involves higher risk
B)  Risk is higher if a company has more liabilities
C)  Risk is higher if a company has higher assets
D)  The debt ratio is one measure of financial risk
E)  Lower financial leverage involves lower risk

Question 20

Explain debits and credits and their role in the accounting system.

Accepted Answer

The answer of Explain debits and credits and their role...

Exam 2: Analyzing and Recording Transactions

For what reason do most sellers require customers to have their receipts in order to exchange or return purchased items?

A trial balance taken at year-end showed total credits exceeding total debits by $4,950.This discrepancy could have been caused by:

On December 3,the Matador Company paid $5,400 cash in salaries to office personnel.Prepare the general journal entry to record this transaction.

Land and buildings are generally recorded in the same ledger account.

The record in which transactions are first recorded is the:

Transactions are first recorded in the ledger.

Susie and Katie Shea founded CitySlips.What are some accounting challenges they faced when starting her business?

A general journal is:

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

List the steps in processing transactions.

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term. - The process of transferring journal entry information to the ledger

Match the following definitions and terms by placing the number that identifies the best definition in the blank space next to the term. - A file containing all accounts of a company and their balances

Describe source documents and their purpose.

A debit is:

Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings.This error was not discovered before the journal entry was posted.What is the correcting entry?

Which of the following statements is incorrect?

Explain debits and credits and their role in the accounting system.