Question 1

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:

Accepted Answer

Beginning owner's equity = $114,000 - $6...

Question 2

Which of the following statements describing the debt ratio is ?

Accepted Answer

A)   It is of use to both internal and external users of accounting information.
B)   A relatively high ratio is always desirable.
C)   The dividing line for a high and low ratio varies from industry to industry.
D)   Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
E)   The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.F) A) and C)
G) B) and D)

Question 3

Source documents provide evidence of business transactions and are the basis for accounting entries.

Accepted Answer

A) True 
 B)False

Question 4

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

Accepted Answer

A)   Account balance.
B)   Trial balance.
C)   Ledger.
D)   Chart of accounts.
E)   General Journal.F) A) and B)
G) A) and C)

Question 5

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Accepted Answer

A)   Recorded as a debit to an unearned revenue account.
B)   Recorded as a debit to a prepaid expense account.
C)   Recorded as a credit to an unearned revenue account.
D)   Recorded as a credit to a prepaid expense account.
E)   Not recorded in the accounting records until the earnings process is complete.F) C) and D)
G) A) and B)

Question 6

A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Accepted Answer

A)   Office Equipment, understated $130; Fees Earned, overstated $130.
B)   Office Equipment, understated $260; Fees Earned, overstated $130.
C)   Office Equipment, overstated $130; Fees Earned, overstated $130.
D)   Office Equipment, overstated $130; Fees Earned, understated $130.
E)   Office Equipment, overstated $260; Fees Earned, understated $130.F) C) and D)
G) B) and E)

Question 7

Asset accounts normally have credit balances and revenue accounts normally have debit balances.

Accepted Answer

A) True 
 B)False

Question 8

Stride Along 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%.F) B) and E)
G) A) and C)

Question 9

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _______________ for $25,000 and the cash account is _______________ for $25,000.

Accepted Answer

The answer of FastForward purchased $25,000 of equipment for cash....

Question 10

Flora Accounting Services completed these transactions in February:
a. Purchased office supplies on account, $300.
b. Completed work for a client on credit, $500.
c. Paid cash for the office supplies purchased in (a).
d. Completed work for a client and received $800 cash.
e. Received $500 cash for the work described in (b).
f. Received $1,000 from a client for accounting services to be performed in March.
Prepare journal entries to record the above transactions. Explanations are not necessary.

Accepted Answer

The answer of Flora Accounting Services completed these transactions in...

Question 11

A general journal is:

Accepted Answer

A)   A ledger in which amounts are posted from a balance column account.
B)   Not required if T-accounts are used.
C)   A complete record of any transaction and the place from which transaction amounts are posted to the ledger accounts.
D)   Not necessary in electronic accounting systems.
E)   A book of final entry because financial statements are prepared from it.F) B) and D)
G) None of the above

Question 12

The journal is known as a book of original entry.

Accepted Answer

A) True 
 B)False

Question 13

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) B) and D)
G) A) and D)

Question 14

Which of the following statements is ?

Accepted Answer

A)   If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions.
B)   The trial balance is a book of original entry.
C)   Another name for the trial balance is the chart of accounts.
D)   The trial balance is a list of all accounts from the ledger with their balances at a point in time.
E)   The trial balance is another name for the balance sheet as long as debits balance with credits.F) A) and C)
G) B) and C)

Question 15

A debit entry is always favorable.

Accepted Answer

A) True 
 B)False

Question 16

A debit:

Accepted Answer

A)   Always increases an account.
B)   Is the right-hand side of a T-account.
C)   Always decreases an account.
D)   Is the left-hand side of a T-account.
E)   Is not need to record a transaction.F) B) and D)
G) A) and B)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The owner's withdrawal account normally has a credit balance since it is an equity account.

Accepted Answer

A) True 
 B)False

Question 19

IFRS do not require the use of accrual basis accounting.

Accepted Answer

A) True 
 B)False

Question 20

After preparing an (unadjusted) trial balance at year-end, G. Chu of Chu Design Company discovered the following errors:
1. Cash payment of the $225 telephone bill for December was recorded twice.
2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000.
3. A $900 cash withdrawal by the owner was recorded to the correct accounts as $90.
4. An additional investment of $5,000 cash by the owner was recorded as a debit to G. Chu, Capital and a credit to Cash.
5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry.
Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column.
Would the error cause the trial balance to be out of balance?
Would the error cause the trial balance to be out of balance?

Accepted Answer

The answer of After preparing an (unadjusted) trial balance at...

Exam 2: Analyzing and Recording Transactions

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

Correct Answer
verified

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

Correct Answer
verified

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

Correct Answer
verified

Asset accounts normally have credit balances and revenue accounts normally have debit balances.

Correct Answer
verified

The owner's withdrawal account normally has a credit balance since it is an equity account.

Correct Answer
verified

IFRS do not require the use of accrual basis accounting.

Correct Answer
verified

Correct Answer
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A debit:

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

Correct Answer
verified

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Correct Answer
verified

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:

Correct Answer
verified
Beginning owner's equity = $114,000 - $6...
View Answer

Source documents provide evidence of business transactions and are the basis for accounting entries.

Correct Answer
verified

A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Correct Answer
verified

A general journal is:

Correct Answer
verified

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _ for $25,000 and the cash account is _ for $25,000.

Correct Answer
verified

Which of the following statements describing the debt ratio is ?

Correct Answer
verified

A debit entry is always favorable.

Correct Answer
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Which of the following statements is ?

Correct Answer
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Correct Answer
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The journal is known as a book of original entry.

Correct Answer
verified

Exam 2: Analyzing and Recording Transactions

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

Correct AnswerverifiedShow Answer

A report that lists accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Asset accounts normally have credit balances and revenue accounts normally have debit balances.

Correct AnswerverifiedShow Answer

The owner's withdrawal account normally has a credit balance since it is an equity account.

Correct AnswerverifiedShow Answer

IFRS do not require the use of accrual basis accounting.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A debit:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Correct AnswerverifiedShow Answer

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year:

Correct AnswerverifiedBeginning owner's equity = $114,000 - $6...View AnswerShow Answer

Source documents provide evidence of business transactions and are the basis for accounting entries.

Correct AnswerverifiedShow Answer

A $130 credit to Office Equipment was credited to Fees Earned by mistake. By what amounts are the accounts under- or overstated as a result of this error?

Correct AnswerverifiedShow Answer

A general journal is:

Correct AnswerverifiedShow Answer

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _______________ for $25,000 and the cash account is _______________ for $25,000.

Correct AnswerverifiedShow Answer

Which of the following statements describing the debt ratio is ?

Correct AnswerverifiedShow Answer

A debit entry is always favorable.

Correct AnswerverifiedShow Answer

Which of the following statements is ?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The journal is known as a book of original entry.

Correct AnswerverifiedShow Answer

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Beginning owner's equity = $114,000 - $6...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _ for $25,000 and the cash account is _ for $25,000.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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