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Exam 2: Accounting System and Financial Statements

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Question 21

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A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

A) Account balance.
B) Trial balance.
C) Ledger.
D) Chart of accounts.
E) General Journal.

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

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Question 22

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A company had total assets of $350,000, total liabilities of $101,500 and total equity of $248,500. Calculate the company's debt ratio.

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Debt Ratio = Total L...

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Question 23

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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).

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

Lu Lu's Catering has a debt ratio equal to 0.3 and its competitor, Able's Bakery, has a debt ratio equal to 0.7. Determine the statement below that is correct.

If common stock account had a $10,000 credit balance at the beginning of the period, and during the period, the stockholders invest an additional $5,000, the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000. $10,000cr + $5,000cr = $15,000 credit balance

A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

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

All of the following statements accurately describe the debt ratio except:

A $130 credit to Supplies was credited to Fees Earned by mistake. By what amounts are the accounts under or overstated as a result of this error?

You decrease the Accounts Payable account on the ___________ side of its account.

The accountant for a new company is establishing the chart of accounts for the company based on the accounts he expects to be used. He has decided to use a three digit account number with each account type starting with a different number. Which of the following numbers would you expect the Asset range to begin with?

Jackson Advertising Co. had assets of $475,000; liabilities of $275,500; and equity of $199,500. Calculate its debt ratio.

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

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?

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

After preparing an (unadjusted) trial balance at year-end, R. Chang of Chang Window Company, Inc. discovered the following errors: 1. Cash payment of the $225 telephone bill for December was recorded twice. 2. Cash payment of a note payable was recorded as a debit to Cash and a debit to Notes Payable for $1,000. 3. A $900 cash dividend paid to the owner was recorded to the correct accounts as $90. 4. An additional investment of $5,000 cash by the owner was recorded as a debit to Common Stock and a credit to Cash. 5. A credit purchase of office equipment for $1,800 was recorded as a debit to the Office Equipment account with no offsetting credit entry. Using the form below, indicate whether the error would cause the trial balance to be out of balance by placing an X in either the yes or no column. Would the error cause the trial balance to be out of balance?

If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

Explain the recording and posting processes.

Posting is the transfer of journal entry information to the ledger.