FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Analyzing and Recording Transactions

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

True/False

Review LaterAdd Note

Review Later

A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

A) True
B) False

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Withdrawals by the owner are a business expense.

A) True
B) False

Correct Answer

verified

Show Answer

Question 3

Essay

Review LaterAdd Note

Identify by marking an X in the appropriate column, whether each of the following items would likely serve as a source document. The first one is done as an example. $\begin{array} { | l | l | l | l | } \hline & & \text { Yes } & \text { No } \\\hline \text { Ex. } & \text { Credit eard } & & \mathrm { X } \\\hline \text { a. } & \text { Credit eard receipt } & & \\\hline \text { b. } & \text { Purchase order } & & \\\hline \text { c. } & \text { Invoice } & & \\\hline \text { d. } & \text { Balance sheet } & & \\\hline \text { e. } & \text { Bark statement } & & \\\hline \text { f. } & \text { Jounnal entry } & & \\\hline \text { g. } & \text { Telephone bill } & & \\\hline \text { h. } & \text { Employee earnings record } & & \\\hline\end{array}$

Revenues always increase equity.

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

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then owner's capital and withdrawals, followed by revenues and expenses.

HH Consulting & Design 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 will HH Consulting & Design make to record this transaction? A) $\begin{array}{|l|r|r|}\hline \text { Cash } & 900 & \\\hline \text { Consulting Revenue } & & 800 \\\hline \text { Design Revenue } & & 100 \\\hline\end{array}$ B) $\begin{array}{|l|r|r|}\hline \text { Consulting Revenue } & 800 & \\\hline \text { Design Revenue } & 100 & \\\hline \text { Cash } & & 900 \\\hline\end{array}$ C) $\begin{array}{|l|r|r|}\hline \text { Accounts Payable } & 800 & \\\hline \text { Design Revenue } & & 100 \\\hline \text { Consulting Revenue } & & 800 \\\hline\end{array}$ D) $\begin{array}{|l|r|r|}\hline \text { Accounts Receivable } & 900 & \\\hline \text { Consulting Revenue } & & 800 \\\hline \text { Design Revenue } & & 100 \\\hline\end{array}$ E) $\begin{array}{|l|r|r|}\hline \text { Design Revenue } & 100 & \\\hline \text { Consulting Revenue } & 800 & \\\hline \text { Accounts Receivable } & & 900 \\\hline\end{array}$

A debit entry is always an increase in the account.

Debits increase asset and expense accounts.

At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction? A) $\begin{array}{|l|r|r|}\hline \text { Salaries Expense } & 300 & \\\hline \text { Accounts Payable } & & 300 \\\hline\end{array}$ B) $\begin{array}{|l|r|r|}\hline \text { Salaries Expense } & 300 & \\\hline \text { Cash } & & 300 \\\hline\end{array}$ C) $\begin{array}{|l|r|r|}\hline \text { Salaries Expense } & 300 & \\\hline \text { J. Smith, Withdrawals } & & 300 \\\hline\end{array}$ D) $\begin{array}{|l|r|r|}\hline \text { Cash } & 300 & \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}$ $\begin{array}{l}\text { E) }\\\begin{array} { | l | r | r | } \hline \text { Salaries Payable } & 300 & \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}\end{array}$

Crediting an expense account decreases it.

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address).

A law firm collected $1,800 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

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?

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

The following accounts appear on either the Income Statement (IS)or Balance Sheet (BS). In the space to the left of each account, write the letters, IS or BS to identify the statement on which the account appears. _____ 1. Office Equipment _____ 2. Rent Expense 3. Unearned Fees Revenues _____ 4. Rent Expense _____ 5. Accounts Payable _____ 6. Owner, Capital 7. Fees Revenue 8. Cash _____ 9. Notes Receivable _____ 10. Wages Payable