Question 1

Identify whether a debit or credit yields the indicated change for each of the following accounts.

Accepted Answer

The answer of Identify whether a debit or credit yields...

Question 2

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

Accepted Answer

The debt ratio is calculated by dividing...

Question 3

Accounts are normally decreased by debits.

Accepted Answer

A) True 
 B)False  False

Question 4

The numbering system used in a company's chart of accounts:

Accepted Answer

A)   Is the same for all companies.
B)   Is determined by generally accepted accounting principles.
C)   Depends on the source documents used in the accounting process.
D)   Typically begins with balance sheet accounts.
E)   Typically begins with income statement accounts.

Question 5

Unearned revenues are:

Accepted Answer

A)   Revenues that have been earned and received in cash.
B)   Revenues that have been earned but not yet collected in cash.
C)   Liabilities created when a customer pays in advance for products or services before the revenue is earned.
D)   Recorded as an asset in the accounting records.
E)   Increases to owners' capital.

Question 6

A customer's promise to pay is called an account payable to the seller.

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 owner's equity, and a balance sheet. Sal made no additional investments in the company during the year.

Accepted Answer

Sal's Beauty Shop
S...

Question 8

Cash withdrawn by the owner of a proprietorship should be treated as an expense of the business.

Accepted Answer

A) True 
 B)False

Question 9

Stride Along had total liabilities of $130 million and total assets of $375 million. Its debt ratio was ______________.

Accepted Answer

$130 million/$375 million = 347%

Question 10

Which of the following statements is correct?

Accepted Answer

A)   When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
B)   Promises of future payment are called accounts receivable.
C)   Increases and decreases in cash are always recorded in the owner's capital account.
D)   An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
E)   Accrued liabilities include accounts receivable.

Question 11

Transactions are first recorded in the ledger.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is incorrect?

Accepted Answer

A)   The normal balance of accounts receivable is a debit.
B)   The normal balance of owner's withdrawals is a debit.
C)   The normal balance of unearned revenues is a credit.
D)   The normal balance of an expense account is a credit.
E)   The normal balance of the owner's capital account is a credit.

Question 13

An owner's capital account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

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

Question 15

An account used to record the owner's investments in the business is called a(n) :

Accepted Answer

A)   Withdrawals account.
B)   Capital account.
C)   Revenue account.
D)   Expense account.
E)   Liability account.

Question 16

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

Accepted Answer

The answer of A ___________________________ gives a complete record of...

Question 17

A ledger is:

Accepted Answer

A)   A record containing increases and decreases in a specific asset, liability, equity, revenue, or expense item.
B)   A journal in which transactions are first recorded.
C)   A collection of documents that describe transactions and events entering the accounting process.
D)   A list of all accounts with their debit balances at a point in time.
E)   A record containing all accounts and their balances used by a company.

Question 18

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

Accepted Answer

A)   The total of the Debit column of the trial balance will exceed the total of the Credit column by $4,700.
B)   The total of the Credit column of the trial balance will exceed the total of the Debit column by $4,700.
C)   The total of the Debit column of the trial balance will exceed the total of the Credit column by $9,400.
D)   The total of the Credit column of the trial balance will exceed the total of the Debit column by $9,400.
E)   The total of the Debit column of the trial balance will equal the total of the Credit column. C

Question 19

Debits increase asset and expense accounts.

Accepted Answer

A) True 
 B)False

Question 20

The following are all of the accounts of Flaherty Company that have a balance at the end of August. All accounts have normal balances:
a. Calculate net income.
b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.

Accepted Answer

The answer of The following are all of the accounts...

Exam 2: Analyzing and Recording Transactions

Identify whether a debit or credit yields the indicated change for each of the following accounts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe debt ratio is calculated by dividing...View AnswerShow Answer

Accounts are normally decreased by debits.

Correct AnswerverifiedFalse

The numbering system used in a company's chart of accounts:

Correct AnswerverifiedShow Answer

Unearned revenues are:

Correct AnswerverifiedShow Answer

A customer's promise to pay is called an account payable to the seller.

Correct AnswerverifiedShow Answer

Based on the following trial balance for Sal's Beauty Shop, prepare an income statement, statement of owner's equity, and a balance sheet. Sal made no additional investments in the company during the year.

Correct Answerverified Sal's Beauty ShopS...View AnswerShow Answer

Cash withdrawn by the owner of a proprietorship should be treated as an expense of the business.

Correct AnswerverifiedShow Answer

Stride Along had total liabilities of $130 million and total assets of $375 million. Its debt ratio was ______________.

Correct Answerverified$130 million/$375 million = 347%

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Transactions are first recorded in the ledger.

Correct AnswerverifiedShow Answer

Which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

An owner's capital account normally has a debit balance.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An account used to record the owner's investments in the business is called a(n) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A ledger is:

Correct AnswerverifiedShow Answer

The credit purchase of a delivery truck for $4,700 was posted to Delivery Trucks as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

Correct AnswerverifiedC

Debits increase asset and expense accounts.

Correct AnswerverifiedShow Answer

The following are all of the accounts of Flaherty Company that have a balance at the end of August. All accounts have normal balances: a. Calculate net income. b. Determine the amount of owner's equity to be shown on the August 31 balance sheet.

Correct AnswerverifiedShow Answer

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The debt ratio is calculated by dividing...
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False

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Sal's Beauty Shop
S...
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$130 million/$375 million = 347%

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

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C

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