Question 1

Smiles Entertainment had the following accounts and balances at December 31:   Account  Debit  Credit  Cash $10,000 Acoounts Receivable 2,000 Prepaid Insurance 2,400 Supplies 1,000 Acoounts Payable $5,000 Common Stock 4,900 Service Revenue 7,000 Salaries Expense 500 Utilities Expense 1,000 Totals $16,900$16,900\begin{array} { | l | r | r | } \hline 	ext { Account } & 	ext { Debit } & 	ext { Credit } \\hline 	ext { Cash } & \$ 10,000 & \\hline 	ext { Acoounts Receivable } & 2,000 & \\hline 	ext { Prepaid Insurance } & 2,400 & \\hline 	ext { Supplies } & 1,000 & \\hline 	ext { Acoounts Payable } & & \$ 5,000 \\hline 	ext { Common Stock } & & 4,900 \\hline 	ext { Service Revenue } &  & 7,000 \\hline 	ext { Salaries Expense } &500 & \\hline 	ext { Utilities Expense } & 1,000\\hline 	ext { Totals } &  \$ 16,900 & \$ 16,900  \\hline\end{array} Account  Cash  Acoounts Receivable  Prepaid Insurance  Supplies  Acoounts Payable  Common Stock  Service Revenue  Salaries Expense  Utilities Expense  Totals ​ Debit $10,0002,0002,4001,0005001,000$16,900​ Credit $5,0004,9007,000$16,900​​  Using the information in the table, calculate the company's reported net income for the period.

Accepted Answer

A)  $1,100.
B)  $4,000.
C)  $4,500.
D)  $10,400.
E)  $5,500.  E

Question 2

You increase the Service Revenue account on the ___________ side of its account.

Accepted Answer

The answer of You increase the Service Revenue account on...

Question 3

Identify the account below that is classified as an asset account:

Accepted Answer

A)  Unearned Revenue
B)  Accounts Payable
C)  Supplies
D)  Common Stock
E)  Service Revenue

Question 4

Unearned revenues are generally:

Accepted Answer

A)  Revenues that have been earned and received in cash.
B)  Revenues that have been earned but not yet collected in cash.
C)  Liabilities created when a customer pays in advance for products or services before the revenue is earned.
D)  Recorded as an asset in the accounting records.
E)  Increases to stockholders equity.

Question 5

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

Accepted Answer

liability

Question 6

The right side of a T-account is a(n) :

Accepted Answer

A)  Debit.
B)  Increase.
C)  Credit.
D)  Decrease.
E)  Account balance.

Question 7

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Accepted Answer

A) True 
 B)False  True

Question 8

Transactions are recorded first in the ledger and then transferred to the journal.

Accepted Answer

A) True 
 B)False

Question 9

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?

Accepted Answer

A)  Supplies, understated $130; Fees Earned, overstated $130.
B)  Supplies, understated $260; Fees Earned, overstated $130.
C)  Supplies, overstated $130; Fees Earned, overstated $130.
D)  Supplies, overstated $130; Fees Earned, understated $130.
E)  Supplies, overstated $260; Fees Earned, understated $130.

Question 10

A revenue account normally has a debit balance.

Accepted Answer

A) True 
 B)False

Question 11

Describe what source documents are and the purpose they serve in a business.

Accepted Answer

Source documents are the proof that tran...

Question 12

Identify the correct formula below used to calculate the debt ratio.

Accepted Answer

A)  Total Equity/Total Liabilities.
B)  Total Liabilities/Total Equity.
C)  Total Liabilities/Total Assets.
D)  Total Assets/Total Liabilities.
E)  Total Equity/Total Assets.

Question 13

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

Accepted Answer

A) True 
 B)False

Question 14

The general journal is known as the book of final entry because financial statements are prepared from it.

Accepted Answer

A) True 
 B)False

Question 15

A debit:

Accepted Answer

A)  Always increases an account.
B)  Is the right-hand side of a T-account.
C)  Always decreases an account.
D)  Is the left-hand side of a T-account.
E)  Is not need to record a transaction.

Question 16

Crediting an expense account decreases it.

Accepted Answer

A) True 
 B)False

Question 17

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

Accepted Answer

balance co...

Question 18

For each of the accounts in the following table (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account.
Account Type
Normal Balance
a. Wages Expense
b. Accounts Receivable
c. Commissions Earned
d. Salaries Payable
e. Common Stock
f. Unearned Advertising Revenue
g. Salaries Expense
h. Magazine Subscription Revenue
i. Dividends
j. Prepaid Insurance

Accepted Answer

The answer of For each of the accounts in the...

Question 19

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Accepted Answer

The answer of BBB Company sends a $2,500 invoice to...

Question 20

Identify the statement below that is correct.

Accepted Answer

A)  The left side of a T-account is the credit side.
B)  Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.
C)  The left side of a T-account is the debit side.
D)  Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts.
E)  In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

Exam 2: Accounting for Business Transactions

Correct Answer
verified
E

You increase the Service Revenue account on the ___________ side of its account.

Correct Answer
verified

Identify the account below that is classified as an asset account:

Correct Answer
verified

Unearned revenues are generally:

Correct Answer
verified

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

Correct Answer
verified
liability

The right side of a T-account is a(n) :

Correct Answer
verified

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Correct Answer
verified
True

Transactions are recorded first in the ledger and then transferred to the journal.

Correct Answer
verified

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?

Correct Answer
verified

A revenue account normally has a debit balance.

Correct Answer
verified

Describe what source documents are and the purpose they serve in a business.

Correct Answer
verified
Source documents are the proof that tran...
View Answer

Identify the correct formula below used to calculate the debt ratio.

Correct Answer
verified

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

Correct Answer
verified

The general journal is known as the book of final entry because financial statements are prepared from it.

Correct Answer
verified

A debit:

Correct Answer
verified

Crediting an expense account decreases it.

Correct Answer
verified

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

Correct Answer
verified
balance co...
View Answer

Correct Answer
verified

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Correct Answer
verified

Identify the statement below that is correct.

Correct Answer
verified

Exam 2: Accounting for Business Transactions

Correct AnswerverifiedE

You increase the Service Revenue account on the ___________ side of its account.

Correct AnswerverifiedShow Answer

Identify the account below that is classified as an asset account:

Correct AnswerverifiedShow Answer

Unearned revenues are generally:

Correct AnswerverifiedShow Answer

Unearned revenue is classified as a(an) _______________ on a business's balance sheet.

Correct Answerverifiedliability

The right side of a T-account is a(n) :

Correct AnswerverifiedShow Answer

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Correct AnswerverifiedTrue

Transactions are recorded first in the ledger and then transferred to the journal.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A revenue account normally has a debit balance.

Correct AnswerverifiedShow Answer

Describe what source documents are and the purpose they serve in a business.

Correct AnswerverifiedSource documents are the proof that tran...View AnswerShow Answer

Identify the correct formula below used to calculate the debt ratio.

Correct AnswerverifiedShow Answer

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

Correct AnswerverifiedShow Answer

The general journal is known as the book of final entry because financial statements are prepared from it.

Correct AnswerverifiedShow Answer

A debit:

Correct AnswerverifiedShow Answer

Crediting an expense account decreases it.

Correct AnswerverifiedShow Answer

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the _____________________.

Correct Answerverifiedbalance co...View AnswerShow Answer

Correct AnswerverifiedShow Answer

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Correct AnswerverifiedShow Answer

Identify the statement below that is correct.

Correct AnswerverifiedShow Answer

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E

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liability

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True

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Source documents are the proof that tran...
View Answer

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balance co...
View Answer

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