Question 1

Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 33.3%.

Accepted Answer

A) True 
 B)False

Question 2

If the Debit and Credit column totals of a trial balance are equal, then:

Accepted Answer

A)  All transactions have been recorded correctly 
B)  All entries from the journal have been posted to the ledger correctly 
C)  All ledger account balances are correct 
D)  The total debit entries and total credit entries are equal 
E)  The balance sheet would be correct

Question 3

A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is a(n):

Accepted Answer

A)  Journal 
B)  Posting 
C)  Trial balance 
D)  Account 
E)  Chart of accounts

Question 4

Source documents include all of the following except:

Accepted Answer

A)  Sales tickets 
B)  Ledgers 
C)  Checks 
D)  Purchase orders 
E)  Bank statements

Question 5

Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Accepted Answer

A)  38.6% 
B)  13.4% 
C)  34.9% 
D)  25.9% 
E)  14.9%

Question 6

The posting process is the link between the _______________ and the _____________.

Accepted Answer

The answer of The posting process is the link between...

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

What is total for the debits on the Trial Balance for Shiver Ice House?
$\begin{array}{lrr}
\text { Common Stock..... } \$ 120,000 & \text { Accounts Payable.....\$25,000 } \
\text { Cash...............\$116,640 } & \text { Accounts Receivable..\$22,450 } \
\text { Supplies.......... } \$ 1,500 & \text { Office Equipment.....\$23,300 } \
\text { Prepaid Rent......... } \$ 3,200 & \text { Unearned Revenue.... } \$ 4,152 \
\text { Revenue............ } \$ 20,000 & \text { Utilities Expense....... } \$ 422 \
\text { Retained Earnings... } \$ 30,000 & \text { Shaving Equipment... } \$ 31,640
\end{array}$

Accepted Answer

A)  $291,340 
B)  $106,964 
C)  $199,152 
D)  $193,390 
E)  $203.152

Question 9

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

During March, a company had cash receipts of $2,300 and cash disbursements of $6,600. The March 31 cash balance was $2,780. What was the March 1 beginning cash balance?

Accepted Answer

A)  $1,520 
B)  $7,080 
C)  $4,300 
D)  $8,900 
E)  $11,680

Question 12

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

Accepted Answer

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

Question 13

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 14

A company failed to post a $50 debit to the Office Supplies account. The effect of this error will be that:

Accepted Answer

A)  The Office Supplies account balance will be overstated 
B)  The trial balance will not balance 
C)  The error will overstate the debits listed in the journal 
D)  The total debits in the trial balance will be larger than the total credits 
E)  All of the above effects will be caused by the error

Question 15

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 16

What is ending retained earnings for Shiver Ice House?
$\begin{array}{lrr}
\text { Common Stock..... } \$ 120,000 & \text { Accounts Payable.....\$25,000 } \
\text { Cash...............\$116,640 } & \text { Accounts Receivable..\$22,450 } \
\text { Supplies.......... } \$ 1,500 & \text { Office Equipment.....\$23,300 } \
\text { Prepaid Rent......... } \$ 3,200 & \text { Unearned Revenue.... } \$ 4,152 \
\text { Revenue............ } \$ 20,000 & \text { Utilities Expense....... } \$ 422 \
\text { Retained Earnings... } \$ 30,000 & \text { Shaving Equipment... } \$ 31,640
\end{array}$

Accepted Answer

A)  $19,578 
B)  $29,578 
C)  $23,728 
D)  $49,578 
E)  $45,000

Question 17

An account used to record the owner's investments in the business is called:

Accepted Answer

A)  Dividends 
B)  Common Stock 
C)  Revenue 
D)  Expense 
E)  Liability

Question 18

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months contract in advance. Management Services' general journal entry to record this transaction will include a

Accepted Answer

A)  Debit to Unearned Management Fees for $60,000 
B)  Credit to Management Fees Earned for $60,000 
C)  Credit to Cash for $60,000 
D)  Credit to Unearned Management Fees for $60,000 
E)  Debit to Management Fees Earned for $60,000

Question 19

_______________ is the process of transferring journal entry information to the ledger.

Accepted Answer

The answer of _______________ is the process of transferring journal...

Question 20

A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.

Accepted Answer

A) True 
 B)False

Exam 2: Analyzing and Recording Transactions

Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 33.3%.

If the Debit and Credit column totals of a trial balance are equal, then:

A record of the increases and decreases in a specific asset, liability, equity, revenue or expense is a(n) :

Source documents include all of the following except:

Stride Rite has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

The posting process is the link between the ___ and the _.

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

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

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

During March, a company had cash receipts of $2,300 and cash disbursements of $6,600. The March 31 cash balance was $2,780. What was the March 1 beginning cash balance?

The process of transferring general journal information to the ledger 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?

A company failed to post a $50 debit to the Office Supplies account. The effect of this error will be that:

Prepaid expenses are:

An account used to record the owner's investments in the business is called:

Management Services, Inc. provides services to clients. On May 1, a client prepaid Management Services $60,000 for 6-months contract in advance. Management Services' general journal entry to record this transaction will include a

_______________ is the process of transferring journal entry information to the ledger.

A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.