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Exam 2: Analyzing and Recording Transactions

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Question 31

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A transaction that increases an asset and decreases a liability must also affect one or more other accounts.

A) True
B) False

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Question 32

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

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

F) B) and C)
G) A) and E)

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Question 33

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When a company bills a customer for $600 for services rendered,the journal entry to record this transaction will include a $600 debit to Services Revenue.

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

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

Match the changes in each account whether a debit or credit entry

Double entry accounting requires that the impact of each transaction be recorded in at least two accounts.

What would be the account balance in the revenue ledger account after the following transactions? $\begin{array}{|l|l|}\hline \text { Performed services and left a bill } & \$ 4,200 \\\hline \text { Performed services and collected immediately } & \$ 3,500 \\\hline \text { Performed services and billed customer } & \$ 2,200 \\\hline \text { Performed services on account } & \$ 6,000 \\\hline \text { Received partial payment on account } & \$ 1,500\\\hline\end{array}$

Source documents provide evidence of business transactions and are the basis for accounting entries.

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: $\begin{array}{|l|r|r|} \hline& \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\\hline \text { End of the year } & 135,000 & 73,000\\\hline\end{array}$ If the owners invested an additional $12,000 in the business and dividends of $5,000 were paid during the year,what was the amount of net income earned by Josephine's Bakery during the current year?

Which of the following is a true statement regarding debits and credits?

Source documents include all of the following except:

Josephine's Bakery had the following assets and liabilities at the beginning and end of the current year: $\begin{array}{|l|r|r|} \hline& \text { Assets } & \text { Liabilities } \\\hline \text { Beginning of the year } & \$ 114,000 & \$ 68,000 \\\hline \text { End of the year } & 135,000 & 73,000\\\hline\end{array}$ If the owners made no investments and dividends of $5,000 were paid during the year,what was the amount of net income earned by Josephine's Bakery during the current year?

Dividends are a type of business expense.

Which of the following is a TRUE statement concerning a company's financial statements?

____________________________ and _____________________ are the starting points for the analyzing and recording process.

Which of the following formulas can be used to calculate the debt ratio?

_______________ is the process of transferring journal entry information to the ledger.

A written promise to pay a definite sum of money on a specific future date is a(n) :

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.