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Exam 2: Accounting for Transactions

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Question 111

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What would be the account balance in the Service Revenue account after the following transactions, assuming a zero beginning balance?? $\begin{array}{|l|l|}\hline \text { Performed services and left a bill. } & \$ 4,200 \\\hline \text { Performed services and collected immediately. } & \$ 3,500 \\\hline \text { Performed services and billed customer. } & \$ 2,200 \\\hline \text { Performed services on account. } & \$ 6,000 \\\hline \text { Received partial payment on account. } & \$ 1,500 \\\hline\end{array}$

A) $17,400 credit
B) $14,400 credit
C) $14,400 debit
D) $15,900 credit
E) $15,900 debit

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

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Question 112

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A balance column account is:

A) An account entered on the balance sheet.
B) An account with debit and credit columns for posting entries and another column for showing the balance of the account after each entry is posted.
C) An alternate name for the retained earnings account.
D) An account used to record the transfers of assets from a business to its stockholders.
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

F) C) and D)
G) B) and C)

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Question 113

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The three general categories of accounts in a general ledger are __________________, _________________ and __________________________.

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

When a company bills a customer for $600 for services rendered, the journal entry to record this transaction will include a $600 debit to Services Revenue.

Which of the following statements are true?

An account balance is:

A company paid $2,500 cash to satisfy a previously recorded account payable, the only liability on the books. Assume the company had a $4,000 balance in Cash immediately prior to this transaction. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts. Show ending account balances.

Increases in liability accounts are recorded as debits.

The _______________________ is a record containing all accounts (with balances) used by a company.

Explain how accounts are used in recording information about transactions.

Indicate whether a debit or credit entry would be made to record the following changes in each account: a. To decrease Cash. b. To increase Common Stock. c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Retained Earnings.

A transaction that increases an asset and decreases a liability must also affect one or more other accounts.

Unearned revenues are:

What would be the appropriate entry for the following transaction? Bill Co. performed $5,200 in consulting services on account.

Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts: assets, liabilities, equity, revenues, and expenses.

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

Based on the following trial balance for Sal's Beauty Shop, prepare an income statement, statement of retained earnings and a balance sheet. Sal made no additional investments in the company during the year. SAI'S BEAUTY SHOP Trial Balarice December 31 $\begin{array}{|l|r|r|}\hline \text { Cash } & \$ 6,500 & \\\hline \text { Accounts receivable } & 475 & \\\hline \text { Beauty supplies } & 2,500 & \\\hline \text { Beauty shop equipment } & 17,000 & \\\hline \text { Accounts payable } & & \$ 745 \\\hline \text { Common stock } & & 10,000 \\\hline \text { Retained earnings } & & 11,155 \\\hline \text { Dividends } & 36,000 & \\\hline \text { Revenue earned } & & 72,000 \\\hline \text { Beauty supplies expense } & 3,425 & \\\hline \text { Rent expense } & 6,000 & \\\hline \text { Wages expense } & 22,000 & \\\hline \text { Totals } & \$ 93,900 & \$ 93,900 \\\hline\end{array}$

The heading on each financial statement lists the three W's - Who (the name of the organization), What (the name of the statement), and Where (the organization's address)