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Exam 2: Accounting for Business Transactions

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Question 101

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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.

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Question 102

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Identify the account below that is classified as a liability account:

A) Cash
B) Accounts Payable
C) Salaries Expense
D) Retained Earnings
E) Equipment

F) C) and E)
G) All of the above

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Question 103

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Describe what source documents are and the purpose they serve in a business.

If cash was incorrectly debited for $100 instead of correctly debiting accounts receivable for $100,assuming no other errors,the trial balance will balance.

When cash is received from a stockholder in exchange for common stock,the transaction is recorded by debiting Cash and crediting a(n) :

Sally's Salon began operations on January 1 of the current year with an investment by Sally of $21,155 in exchange for common stock.Based on the following trial balance prepare an income statement,statement of retained earnings,and a balance sheet.There were no additional common stock issuances during the year.

Identify each of the following accounts as a revenue (R),expense (E),asset (A),liability (L),or equity (SE)by placing initials (R,E,A,L or SE)in the blanks. ____ 1.Salary Expense ____ 2.Cash ____ 3.Equipment ____ 4.Common Stock ____ 5.Fees Revenue ____ 6.Accounts Receivable ____ 7.Accounts Payable ____ 8.Dividends ____ 9.Supplies ____ 10.Unearned Revenue ____ 11.Prepaid Insurance ____ 12.Office Furniture

A tool that represents a ledger account and is used to show the effects of transactions is called a:

Prepaid accounts (also called prepaid expenses) are generally:

The Dividends account normally has a debit balance.

Sharp Services provided $800 of consulting work and $100 of design work to the same client.It billed the client for the total amount and is expecting to collect from the customer next month.Which of the following general journal entries did Sharp Services make to record the billing of the customer?

A record containing all the separate accounts for a company as well as all of their balances is called the________

Debits increase asset and expense accounts.

Jeff Jackson opened Jackson's Repairs on March 1 of the current year.During March,the following transactions occurred: 1.Jackson invested $25,000 cash in the business in exchange for common stock. 2.Jackson contributed $100,000 of equipment to the business. 3.The company paid $2,000 cash to rent office space for the month of March. 4.The company received $16,000 cash for repair services provided during March. 5.The company paid $6,200 for salaries for the month of March. 6.The company provided $3,000 of services to customers on account. 7.The company paid cash of $500 for utilities for the month of March. 8.The company received $3,100 cash in advance from a customer for repair services to be provided in April. 9.The company paid $5,000 in cash dividends. Based on this information,net income for March would be:

Transactions are recorded first in the ledger and then transferred to the journal.

During the month of March,Harley's Computer Services made purchases on account totaling $43,500.Also during the month of March,Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance.If the balance in the accounts payable account at the beginning of March was $77,300,what is the balance in accounts payable at the end of March?

In a double-entry accounting system,total debits must equal total credits for all entries,and total debit account balances in the ledger must equal total credit account balances.

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

An income statement reports the revenues earned minus expenses incurred by a business over a period of time.

On a trial balance,if the Debit and Credit column totals are equal,then: