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Exam 2: Analyzing and Recording Transactions

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Question 41

True/False

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Neither U.S.GAAP nor IFRS require the use of accrual basis accounting.

A) True
B) False

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Question 42

Multiple Choice

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Smiles Entertainment had the following accounts and balances at December 31: Using the information in the table,calculate the company's reported net income for the period.

A) $1,100.
B) $4,000.
C) $4,500.
D) $10,400.
E) $5,500.

F) B) and E)
G) A) and B)

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Question 43

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Larry Bar opened an frame shop and completed these transactions: 1.Larry started the shop by investing $40,000 cash and equipment valued at $18,000. 2) Purchased $70 of office supplies on credit. 3) Paid $1,200 cash for the receptionist's salary. 4) Sold a custom frame service and collected a $1,500 cash on the sale. 5) Completed framing services and billed the client $200. What was the balance of the cash account after these transactions were posted?

J.Brown Consulting paid $500 cash for utilities for the current month.Given the choices below,determine the general journal entry that J.Brown Consulting will make to record this transaction.

You increase the Service Revenue account on the ___________ side of its account.

All of the following statements regarding a sales invoice are true except:

If a company purchases equipment paying cash,the journal entry to record this transaction will include a debit to Cash.

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

Identify the statement below that is correct?

Larry Matt completed these transactions during December of the current year: Prepare general journal entries to record these transactions.

Identify the statement below that is correct.

At the end of the current year,Leer Company reported total liabilities of $300,000 and total equity of $100,000.The company's debt ratio on the last year-end was:

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

For each of the following (1)identify the type of account as an asset,liability,equity,revenue,or expense,and (2)identify the normal balance of the account.

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

At year-end,a trial balance showed total credits exceed total debits by $4,950.This difference could have been caused by:

An account's balance is the difference between the total debits and total credits for the account,including any beginning balance.

Miley Block is a building consultant.Shown below are (a)several accounts in her ledger with each account preceded by an identification number,and (b)several transactions completed by Block.Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

The same four basic financial statements are prepared by both U.S.GAAP and IFRS.

On April 30,Victor Services had an Accounts Receivable balance of $18,000.During the month of May,total credits to Accounts Receivable were $52,000 from customer payments.The May 31 Accounts Receivable balance was $13,000.What was the amount of credit sales during May?