Question 1

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a:

Accepted Answer

A)  Debit to Telephone Expense for $300.
B)  Credit to Accounts Payable for $300.
C)  Debit to Cash for $300.
D)  Credit to Telephone Expense for $300.
E)  Debit to Accounts Payable for $300.F) All of the above
G) D) and E)

Question 2

ABC Catering received $800 cash from a customer for catering services to be provided in the following month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

Accepted Answer

A)   
B)   
C)   
D)   
E)   F) C) and D)
G) D) and E)

Question 3

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

Accepted Answer

The debt ratio is calculated by dividing...

Question 4

Prepaid expenses are generally:

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 equity.
D)  Assets that represent prepayments of future expenses.
E)  Promises of payments by customers.F) B) and E)
G) C) and E)

Question 5

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

Accepted Answer

A)  A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.
B)  A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.
C)  A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash.
D)  A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.
E)  An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.F) A) and D)
G) All of the above

Question 6

What is a trial balance? What is its purpose?

Accepted Answer

The trial balance is a list of all of th...

Question 7

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Accepted Answer

A) True 
 B)False

Question 8

Unearned revenues are generally:

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 stockholders equity.F) All of the above
G) B) and D)

Question 9

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?

Accepted Answer

A)   
B)   
C)   
D)   
E)   F) A) and E)
G) B) and D)

Question 10

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n) :

Accepted Answer

A)  Account.
B)  Trial balance.
C)  Journal.
D)  T-account.
E)  Balance column account.F) All of the above
G) A) and B)

Question 11

The balance sheet reports the financial position of a company at a point in time.

Accepted Answer

A) True 
 B)False

Question 12

An asset created by prepayment of an insurance expense is:

Accepted Answer

A)  Recorded as a debit to Unearned Revenue.
B)  Recorded as a debit to Prepaid Insurance.
C)  Recorded as a credit to Unearned Revenue.
D)  Recorded as a credit to Prepaid Insurance.
E)  Not recorded in the accounting records until the insurance period expires.F) All of the above
G) A) and B)

Question 13

The debt ratio is used:

Accepted Answer

A)  To measure the ratio of equity to expenses.
B)  To assess the risk associated with a company's use of liabilities.
C)  Only by banks when a business applies for a loan.
D)  To determine how much debt a firm should pay off.
E)  To determine how much debt a company should borrow.F) A) and B)
G) A) and E)

Question 14

Explain debits and credits and their role in the accounting system of a business.

Accepted Answer

Debit refers to the left side of an acco...

Question 15

If Taylor Willow, the owner of Willow Hardware Inc., uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

Accepted Answer

A)  Debit Automobiles and credit Cash.
B)  Debit Cash and credit Salary Expense.
C)  Debit Cash and credit Dividends.
D)  Debit Dividends and credit Cash.
E)  Debit Cash and credit Automobiles.F) All of the above
G) A) and D)

Question 16

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

Accepted Answer

A) True 
 B)False

Question 17

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year:  If Jerry made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Accepted Answer

Beginning stockholders' equity = $114,00...

Question 18

Select the account below that normally has a credit balance.

Accepted Answer

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

Question 19

A company's 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 a company uses with an assigned identification number.
E)  A record containing all accounts and their balances used by the company.F) A) and D)
G) All of the above

Question 20

Based on the following trial balance for Barry's Automotive Shop, Inc., prepare an income statement, statement of retained earnings, and a balance sheet. Barry made no additional investments in the company during the year.

Accepted Answer

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

Exam 2: Accounting System and Financial Statements

The debt ratio is used:

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A company's ledger is:

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Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?

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ABC Catering received $800 cash from a customer for catering services to be provided in the following month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

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Unearned revenues are generally:

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Based on the following trial balance for Barry's Automotive Shop, Inc., prepare an income statement, statement of retained earnings, and a balance sheet. Barry made no additional investments in the company during the year.

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Select the account below that normally has a credit balance.

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What is a trial balance? What is its purpose?

Correct AnswerverifiedThe trial balance is a list of all of th...View AnswerShow Answer

Explain debits and credits and their role in the accounting system of a business.

Correct AnswerverifiedDebit refers to the left side of an acco...View AnswerShow Answer

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year: If Jerry made no investments in the business and withdrew no assets during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Correct AnswerverifiedBeginning stockholders' equity = $114,00...View AnswerShow Answer

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a:

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If Taylor Willow, the owner of Willow Hardware Inc., uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

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An asset created by prepayment of an insurance expense is:

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A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n) :

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Prepaid expenses are generally:

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The balance sheet reports the financial position of a company at a point in time.

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The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

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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

Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.

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If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

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The trial balance is a list of all of th...
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Correct Answer
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Debit refers to the left side of an acco...
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Correct Answer
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Beginning stockholders' equity = $114,00...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The debt ratio is calculated by dividing...
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Correct Answer
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Correct Answer
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