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Exam 2: Accounting for Business Transactions

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Question 51

Multiple Choice

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A debit is used to record which of the following?

A) A decrease in an asset account.
B) A decrease in an expense account.
C) An increase in a revenue account.
D) An increase in a contributed capital account.
E) An increase in the dividends account.

F) A) and B)
G) None of the above

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Question 52

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A customer's promise to pay on credit is classified as an account payable by the seller.

A) True
B) False

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Question 53

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On December 3, the ABBJ Company paid $1,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

Identify the statement below that is correct.

Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea, the stockholder, invested $13,500 cash in the business. 2) Andrea 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:

An account balance is:

Describe the link between a business's income statement, the statement of retained earnings, and the balance sheet.

The purchase of land and buildings will generally be recorded in the same ledger account.

A business's source documents:

Increases in liability accounts are recorded as debits.

Identify the statement below that is true.

Explain the recording and posting processes.

The steps in the accounting process focus on analyzing and recording financial transactions and events within a company. Those steps are shown below. Using the number system of 1 as the first step and 4 as the last step in the process, number the steps in the correct order in which they would occur (1 thru 4). _____ Record relevant transactions and events in a journal _____ Post journal information to the ledger accounts _____ Prepare and analyze the trial balance _____ Analyzing each transaction

___________________ are promises of payment from customers to sellers.

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 Bob Johnson, the stockholder 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?

The debt ratio is used:

_____________ and ______________ are the starting points for the analyzing and recording process. Answers can appear in either order

Rowdy Bolton began Bolton Office Services, Inc. in October and during that month completed these transactions: a. Invested $10,000 cash, and $15,000 of computer equipment. b. Paid $500 cash for an insurance premium covering the next 12 months. c. Completed a word processing assignment for a customer and collected $1,000 cash. d. Paid $200 cash for office supplies. e. Paid $2,000 for October's rent. Prepare journal entries to record the above transactions. Explanations are unnecessary.

Wiley Hill opened Hill's Repairs, Inc. on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: 1. Wiley invested $25,000 cash in the corporation. 2) Wiley contributed $100,000 of equipment to the corporation. 3) The company paid $2,000 cash to rent office space for the month. 4) The company received $16,000 cash for repair services provided during March. 5) The company paid $6,200 for salaries for the month. 6) The company provided $3,000 of services to customers on account. 7) The company paid cash of $500 for monthly utilities. 8) The company received $3,100 cash in advance of providing repair services to a customer. 9) The company paid $5,000 cash in dividends to Wiley. (sole shareholder) Based on this information, the balance in Stockholders' Equity reported on the Balance Sheet at the end of March would be:

Lu Lu's Catering has a debt ratio equal to .3 and its competitor, Able's Bakery, has a debt ratio equal to .7. Determine the statement below that is correct.