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Exam 2: Accounting for Business Transactions

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Question 51

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The record of all accounts and their balances used by a business is called a:

A) Journal.
B) Chart of accounts.
C) General Journal.
D) Balance column journal.
E) Ledger (or General Ledger) .

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Question 52

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The higher a company's debt ratio,the lower the risk of a company not being able to pay its debts.

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Question 53

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The balance sheet reports the financial position of a company at a point in time.

A complete record of each transaction in one place is called a(n) :

JBL Company sends a $2,500 bill to a customer for 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.

NBC made a $2,500 payment on account,to satisfy a previously recorded account payable.Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

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 ________.

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

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

Archer Co.had the following assets and liabilities at the beginning and end of the current year: If $12,000 of common stock was issued during the year,and the business paid $5,000 in dividends during the year,what was the amount of net income earned by Archer Co.?

Which of the following is not a step in the accounting process?

An income statement reports revenues earned minus expenses incurred over a period of time.

Matthew Martin,the sole stockholder of Innovation Consulting,started the business by investing $40,000 cash in exchange for common stock.Identify the general journal entry below that Innovation Consulting will make to record the transaction.

GreenLawn Co.provides landscaping services to clients.On May 1,a customer paid GreenLawn $60,000 for 6-months services in advance.GreenLawn's general journal entry to record this transaction will include a:

Alicia Tax Services paid $500 to settle an account payable.Which of the following general journal entries will Alicia Tax Services make to record this transaction?

Given each of the following errors,indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit)will have the larger total as a result of the error. a.$100 debit to Cash was debited to the Cash account twice. b.$1,900 credit to Sales was posted as a $190 credit. c.$5,000 debit to Office Equipment was debited to Office Supplies. d.$625 debit to Prepaid Insurance was posted as a $62.50 debit. e.$520 credit to Accounts Payable was not posted.

Provided below is a list of definitions and terms.Match them by placing the letter that identifies the best definition in the blank space next to each term.

Funky Music purchased $25,000 of equipment for cash.The asset account,Equipment,is ________ for $25,000 and the Cash account is ________ for $25,000.

Neither U.S.GAAP nor IFRS require the use of accrual basis accounting.

If a company is highly leveraged,this means that it has relatively high risk of not being able to repay its debt.