Exam 2: Financial Statements and the Accounting System

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Accounts are classified into three gener...

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

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A) Debit to Unearned Management Fees for $30,000.
B) Credit to Management Fees Earned for $30,000.
C) Credit to Cash for $30,000.
D) Credit to Unearned Management Fees for $30,000.
E) Debit to Management Fees Earned for $30,000.

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A) Debit Telephone Expense,$300; Credit Cash,$300.
B) Debit Telephone Expense,$300; Credit Accounts Payable,$300.
C) Debit Cash,$300; Credit Telephone Expense,$300.
D) Debit Accounts Payable,$300; Credit Telephone Expense,$300.
E) Debit Prepaid Expense,$300; Credit Cash,$300.

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A) $\begin{array}{|l|r|r|}\hline \text { Insurance Expense } & 2,500 & \\\hline \text { Cash } & & 2,500 \\\hline\end{array}$
B) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,500 & \\\hline \text { Insurance Expense } & & 2,500 \\\hline\end{array}$
C) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,500 & \\\hline \text { Prepaid Insurance } & & 2,500 \\\hline\end{array}$
D) $\begin{array}{|l|r|r|}\hline \text { Prepaid Insurance } & 2,500 & \\\hline \text { Cash } & & 2,500 \\\hline\end{array}$
E) $\begin{array}{|l|r|r|}\hline \text { Insurance Expense } & 2,500 & \\\hline \text { Prepaid Insurance } & & 2,500 \\\hline\end{array}$

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A) Debit Accounts Receivable,$1,800; credit Unearned Legal Fees Revenue,$1,800.
B) Debit Cash,$1,800; credit Unearned Legal Fees Revenue,$1,800.
C) Debit Legal Fees Revenue,$1,800; credit Accounts Receivable,$1,800.
D) Debit Accounts Receivable,$1,800; credit Legal Fees Revenue,$1,800.
E) Debit Cash,$1,800; credit Accounts Receivable,$1,800.

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A) $\begin{array}{|l|r|r|}\hline \text { Cash } & 40,000 & \\\hline \text { Common Stock } & & 40,000 \\\hline\end{array}$
B) $\begin{array}{|l|r|r|}\hline \text { Common Stock } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}$
C) $\begin{array}{|l|r|r|}\hline \text { Investments } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}$
D) $\begin{array}{|l|r|r|}\hline \text { Investments } & 40,000 & \\\hline \text { Common Stock } & & 40,000 \\\hline\end{array}$
E) $\begin{array}{|l|r|r|}\hline \text { Cash } & 40,000 & \\\hline \text { Increased Equity } & & 40,000 \\\hline\end{array}$

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A) Cash.
B) Office Equipment.
C) Wages Payable.
D) Dividends.
E) Sales Salaries Expense.

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A) $\begin{array}{|l|r|r|}\hline \text { Dividends } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}$
B) $\begin{array}{|l|r|r|}\hline \text { Common Stock } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}$
C) $\begin{array}{|l|r|r|}\hline \text { Dividends } & 2,000 & \\\hline \text { Common Stock } & & 2,000 \\\hline\end{array}$
D) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,000 & \\\hline \text { Common Stock } & & 2,000 \\\hline\end{array}$
E) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,000 & \\\hline \text { Dividends } & & 2,000 \\\hline\end{array}$

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

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