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A prepaid expense occurs when a company pays in advance for a service or goods for which the benefit extends beyond the current accounting period.

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The following postings show transactions for November, 2020 for Guttierez Contracting. The following postings show transactions for November, 2020 for Guttierez Contracting. -Use the data from the T account postings to re-create the journal entries made for November. Prepare an explanation for each entry. The first one is done for you as an example for the November 1 posting. -Use the data from the T account postings to re-create the journal entries made for November. Prepare an explanation for each entry. The first one is done for you as an example for the November 1 posting.

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A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is


A) recorded as a debit to an unearned revenue account
B) recorded as a debit to a prepaid expense account
C) recorded as a credit to an unearned revenue account
D) recorded as a credit to a prepaid expense account
E) not recorded in the accounting records

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The accounting equation can be expressed as liabilities = assets - equity.

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Which of the following statements is correct?


A) When an insurance premium is paid in advance, the payment is normally recorded in a liability account called Prepaid Insurance.
B) Goods and services are commonly sold to customers on the basis of oral or implied promises of future payment, called promissory notes.
C) Increases and decreases in cash are always recorded in the equity account.
D) An account called Land is commonly used to record increases and decreases in the land and buildings owned by a business.
E) None of these statements are correct.

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If an account was incorrectly debited for $300 instead of correctly credited for $300, the account is out of balance by $300.

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Unearned revenues are assets, because a service or product is owed to the customer.

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A ledger is


A) A book of original entry
B) A journal in which transactions are first recorded
C) A book in which a complete record of transactions is recorded and from which transaction amounts are posted to the accounts
D) A book of final entry
E) Another name for the bank account

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The following postings show transactions for November, 2020 for Guttierez Contracting. The following postings show transactions for November, 2020 for Guttierez Contracting. -Use the information in the T accounts and prepare a trial balance at November 30, 2020 Guttierez Contracting Trial Balance November 30, 2020 -Use the information in the "T" accounts and prepare a trial balance at November 30, 2020 Guttierez Contracting Trial Balance November 30, 2020

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The process of transferring data from the general journal to the general ledger is called


A) Ledgerizing
B) Posting
C) Analyzing
D) Recording
E) Journalizing

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Welder Company purchases supplies from Plumber Company on account. The entry for this transaction will include a


A) Debit to Accounts Payable for Welder Company
B) Debit to Accounts Receivable for Welder Company
C) Debit to Accounts Receivable for Plumber Company
D) Credit to Accounts Payable for Plumber Company
E) Credit to Accounts Receivable for Welder Company

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Explain how accounts are used in recording information about transactions.

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Accounts are classified into five major ...

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When a business sends a bill for $200 to a customer for services rendered, the journal entry to record this transaction will include a $200 credit to Accounts Receivable.

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The following T-accounts reflect the correct posting of a journal entry on January 9, 2017 by Bailey Company: The following T-accounts reflect the correct posting of a journal entry on January 9, 2017 by Bailey Company: What transaction is represented by the posting? A) Bailey sold inventory to a customer for $10,000 on credit. B) Bailey bought supplies on credit from a supplier for $10,000 on credit. C) Bailey bought supplies from a supplier for $10,000 cash. D) Bailey paid a supplier $10,000 cash to pay down the amount owing on their account. E) Bailey received $10,000 from a customer in payment of his account. What transaction is represented by the posting?


A) Bailey sold inventory to a customer for $10,000 on credit.
B) Bailey bought supplies on credit from a supplier for $10,000 on credit.
C) Bailey bought supplies from a supplier for $10,000 cash.
D) Bailey paid a supplier $10,000 cash to pay down the amount owing on their account.
E) Bailey received $10,000 from a customer in payment of his account.

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The following transactions occurred during July for Hurley Services: The following transactions occurred during July for Hurley Services: How much revenue was earned in July? A) $1,200 B) $2,300 C) $2,900 D) $5,500 E) $7,000 How much revenue was earned in July?


A) $1,200
B) $2,300
C) $2,900
D) $5,500
E) $7,000

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KrenzKarKare, 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 General Ledger accounts. When he tried to locate a particular entry originally made on September 8, he found it confusing and time-consuming. He has hired you to improve his bookkeeping procedures. The accounts in his General Ledger follow: KrenzKarKare, 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 General Ledger accounts. When he tried to locate a particular entry originally made on September 8, he found it confusing and time-consuming. He has hired you to improve his bookkeeping procedures. The accounts in his General Ledger follow: Prepare the general journal entries, in chronological order, from the general ledger entries shown. Include a brief description of the probable nature of each transaction. Prepare the general journal entries, in chronological order, from the general ledger entries shown. Include a brief description of the probable nature of each transaction.

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A book of original entry is


A) A book in which amounts are posted from a journal
B) Another name for the cash account
C) Another name for the general journal
D) Also called a ledger
E) Sometimes called a book of final entry

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Explain debits and credits and their role in the accounting system.

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Debit refers to the left side of an acco...

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The following is a correct journal entry: The following is a correct journal entry: What is this journal entry recording? A) An increase in an asset and an increase in owners' equity. B) An increase in an asset and a decrease in owners' equity. C) An increase in an asset and an increase in a liability. D) An increase in owners' equity and a decrease in assets. E) A decrease in an asset and a decrease in owners' equity. What is this journal entry recording?


A) An increase in an asset and an increase in owners' equity.
B) An increase in an asset and a decrease in owners' equity.
C) An increase in an asset and an increase in a liability.
D) An increase in owners' equity and a decrease in assets.
E) A decrease in an asset and a decrease in owners' equity.

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Credits to accounts are always increases.

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