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Exam 2: Analyzing and Recording Transactions

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Question 121

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Paul's Landscaping paid $500 on account for supplies purchased in the prior month. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

A) Debit Accounts payable, $500; credit Cash, $500.
B) Debit Office supplies expense, $500; credit Cash, $500.
C) Debit Cash, $500; credit Office supplies, $500.
D) Debit Office supplies, $500; credit Accounts payable, $500.
E) Debit Office supplies, $500; credit Cash, $500.

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Question 122

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A business paid $100 cash to Charles Nice (the owner of the business) for his personal use. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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Question 123

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A business's source documents:

Identify the account below that is classified as a liability account:

Explain the debt ratio and its use in analyzing a company's financial condition.

The record of all accounts and their balances used by a business is called a:

At the beginning of January of the current year, Little Mikey's Catering ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:

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?

Provided below is a list of definitions and terms. Match them by placing the letter that identifies the best definition in the blank space next to each term. _____ 1. General journal _____ 2. Chart of accounts _____ 3. Note receivable _____ 4. T-account _____ 5. Unearned revenues _____ 6. Compound journal entry _____ 7. Posting reference column _____ 8. Posting _____ 9. Account _____ 10. Trial Balance A. A simple form used as a helpful tool in understanding the effect of transactions and events on specific accounts. B. The most flexible type of journal, it can be used to record any kind of transaction. C. A journal entry that affects at least three accounts. D. A written promise from a customer to pay a definite sum of money on a specified future date. E. A record of the increases and decreases in a specific asset, liability, equity, revenue, or expense item. F. A list of all accounts used by a company and the identification number assigned to each account. G. The process of transferring journal entry information to the ledger. H. A list of accounts and their balances at a point in time; the total debit balances should equal the total credit balances. I. A column in journals where individual account numbers are entered when entries are posted to ledger accounts. J. Liabilities created when customers pay in advance for products or services; satisfied by delivering the products or services in the future.

Identify the statement below that is correct.

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

The following trial balance is prepared from the general ledger of HG's Auto Maintenance. HG'S AUTO MAINTENANCE Trial Balance October 31 $\begin{array}{l|r|r}\hline & \text { Debit } & \text { Credit } \\\hline \text { Cash } & \$ 1,975 & \\\hline \text { Accounts receivable } & 2,800 & \\\hline \text { Supplies } & 500 & \\\hline \text { Shop equipment } & 13,000 & \\\hline \text { Office equipment } & 6,600 & \\\hline \text { Accounts payable } & & \$ 4,510 \\\hline \text { Hal Grifin, Capital } & & 22,000 \\\hline \text { Hal Griffin, Withdrawals } & 4,200 & \\\hline \text { Repair fees earned } & & 11,875 \\\hline \text { Supplies expense } & 8,600 & \\\hline \text { Totals } & \$ 37,675 & \$ 38,385 \\\hline\end{array}$ Because the trial balance did not balance, you decided to examine the accounting records. You found that the following errors had been made: 1. A purchase of supplies on account for $245 was posted as a debit to Supplies and as a debit to Accounts Payable. 2. An investment of $500 cash by the owner was debited to Hal Griffin, Capital and credited to Cash. 3. In computing the balance of the Accounts Receivable account, a debit of $600 was omitted from the computation. 4. One debit of $300 to the Hal Griffin, Withdrawals account was posted as a credit. 5. Office equipment purchased for $800 was posted to the Shop Equipment account. 6. One entire entry was not posted to the general ledger. The transaction involved the receipt of $125 cash for repair services performed for cash. Prepare a corrected trial balance for the HG's Auto Maintenance as of October 31.

The four categories of equity accounts are ________, ________, ________, and ________.

The steps in the accounting process focus on analyzing and recording financial transactions and events within a company. Those steps are shown below. Using the number system of 1 as the first step and 4 as the last step in the process, number the steps in the correct order in which they would occur (1 thru 4). _____ Record relevant transactions and events in a journal, _____ Post journal information to the ledger accounts Prepare and analyze the trial balance Analyzing each transaction

Select the account below that normally has a credit balance.

Unearned revenues are classified as liabilities.

A bookkeeper has debited an asset account for $3,500 and credited a liability account for $2,000. Which of the following would be an incorrect way to complete the recording of this transaction:

Unearned revenues are generally:

The following transactions occurred during July: Received $900 cash for services provided to a customer during July. Received $2,200 cash investment from Bob Johnson, 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. Borrowed $6,000 from the bank by signing a promissory note. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July?

The posting process is the link between the ________ and the ________.