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Exam 2: Accounting System and Financial Statements

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Question 121

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Preparation of a trial balance is the first step in processing a financial transaction.

A) True
B) False

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Question 122

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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 _____________________.

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balance co...

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Question 123

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If a company purchases equipment paying cash, the journal entry to record this transaction will include a debit to Cash.

Based on the following trial balance for Sally's Salon, Inc., prepare an income statement, statement of retained earnings, and a balance sheet. Sally Crawford made no additional investments in the company during the year.

Rowdy Bolton began Bolton Office Services, Inc. in October and during that month completed these transactions: a. Invested $10,000 cash, and $15,000 of computer equipment. b. Paid $500 cash for an insurance premium covering the next 12 months. c. Completed a word processing assignment for a customer and collected $1,000 cash. d. Paid $200 cash for office supplies. e. Paid $2,000 for October's rent. Prepare journal entries to record the above transactions. Explanations are unnecessary.

Identify the account below that is classified as a liability in a company's chart of accounts.

On April 30, Victor Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

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

Miley Block, Inc. is a building consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Block. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

The purchase of land and buildings will generally be recorded in the same ledger account.

Mary Martin, the owner of Martin Consulting, Inc., started the business by investing $40,000 cash. Identify the general journal entry below that Martin Consulting, Inc. will make to record the transaction.

Dividends are reported on a business's income statement.

An account used to record the stockholders' investments in a business is called a(n) :

A ____________ gives a complete record of each transaction in one place, and shows debits and credits for each transaction.

Debits increase asset and expense accounts.

In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.