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Exam 2: Analyzing and Recording Transactions

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Question 41

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

A) True
B) False

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Question 42

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The difference between total debits and total credits for an account, including any beginning balance is the _______________________.

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Question 43

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An asset created by prepayment of an expense is:

A collection of all accounts and their balances used by a business is called a:

A balance column ledger account is:

The account used to record the transfers of assets from a business to its owner is:

The balances for the accounts of Mike's Maintenance Co. for the year ended December 31 are shown below. Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

The following transactions occurred during July: 1. Received $900 cash for services provided to a customer during July. 2) Received $2,200 cash investment from Barbara Hanson, the owner of the business. 3) Received $750 from a customer in partial payment of his account receivable which arose from sales in June. 4) Provided services to a customer on credit, $375. 5) Borrowed $6,000 from the bank by signing a promissory note. 6) Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July?

Explain the recording and posting processes.

All of the following are asset accounts except:

Krenz Car Care, owned and operated by Karl Krenz, began business in September of the current year. Karl, a master mechanic, had no experience with keeping a set of books. As a result, Karl entered all of September's transactions directly to the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow: Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.

If Tim Jones, the owner of Jones Hardware proprietorship, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:

While in the process of posting from the journal to the ledger a company failed to post a $500 debit to the Office Supplies account. The effect of this error will be that:

A list of all accounts and the identification number assigned to each account used by a company is called a:

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

_________________ identify and describe transactions and events and provide objective evidence and amounts for recording.

Hamilton Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

A journal gives a complete record of each transaction in one place, and shows the debits and credits for each transaction.

Andrea Conaway opened Wonderland Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: Conaway invested $13,500 cash in the business. 2) Conaway contributed $20,000 of photography equipment to the business. 3) The company paid $2,100 cash for an insurance policy covering the next 24 months. 4) The company received $5,700 cash for services provided during January. 5) The company purchased $6,200 of office equipment on credit. 6) The company provided $2,750 of services to customers on account. 7) The company paid cash of $1,500 for monthly rent. 8) The company paid $3,100 on the office equipment purchased in transaction #5 above. 9) Paid $275 cash for January utilities. Based on this information, the balance in the cash account at the end of January would be:

On December 3, the Matador Company paid $5,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.