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Exam 2: Analyzing and Recording Transactions

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Question 91

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Preparation of a trial balance is the first step in processing a financial transaction.

A) True
B) False

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Question 92

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The following trial balance is prepared from the general ledger of HG's Auto Maintenance. 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.

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^aCash: Balance $1,975 + $1,000(#2)+ 125(...

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Question 93

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A company's formal promise to pay (in the form of a promissory note) a future amount is a(n) :

Identify the account below that is classified as a liability in a company's chart of accounts:

For each of the following accounts,identify whether a debit or credit yields the indicated change.

ABC Company made a $2,500 payment on account,to satisfy a previously recorded account payable.Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

A $15 credit to Sales was posted as a $150 credit.By what amount is the Sales account in error?

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:

Identify the statement that is incorrect.

A _______________ is a list of all the accounts used by a company and their identification codes but does not contain the balances.

Gi Gi's Bakery has total assets of $425 million.Its total liabilities are $110 million.Its equity is $315 million.Calculate the debt ratio.

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

Revenues and expenses are two categories of ____________________ accounts.

Cash withdrawn by the owner of a proprietorship for personal expenses,should be treated as an expense of the business.

Asset accounts are normally decreased by debits.

A revenue account normally has a debit balance.

On May 31,the Cash account of Bottle's R US had a normal balance of $5,000.During May,the account was debited for a total of $12,200 and credited for a total of $11,500.What was the balance in the Cash account at the beginning of May?

Geraldine Parker,the owner of Gi Gi's Dance Studio,started the business by investing $10,000 cash and donating a building worth $20,000.Identify the general journal entry below that Gi Gi's will make to record the transaction.

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