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Exam 2: Analyzing for Business Transactions

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Question 91

Multiple Choice

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Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

A) $\begin{array} { | c | r | r | } \hline \text { Utilities Expense } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$
B) $\begin{array}{|c|r|r|}\hline \text { Cash } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}$

C) $\begin{array} { | c | r | r | } \hline \text { Utilities Expense } & 400 & \\\hline \text { Accounts Payable } & & 400 \\\hline\end{array}$
D) $\begin{array} { | c | r | r | } \hline \text { Accounts Payable } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}$
E) $\begin{array} { | c | r | r | } \hline \text { Utilities Payable } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$

F) B) and C)
G) D) and E)

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Question 92

Multiple Choice

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All of the following are asset accounts except:

A) Accounts Receivable.
B) Buildings.
C) Supplies expense.
D) Equipment.
E) Prepaid insurance.

F) None of the above
G) C) and D)

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Question 93

Multiple Choice

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Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

A record containing all the separate accounts for a company as well as all of their balances is called the___________________

For each of the following accounts, identify whether a debit or credit yields the indicated change $\begin{array}{|l|l|}\hline \text { a. To increase Fees Eamed } &\quad\quad \\\hline \text { b. To decrease Cash } \\\hline \text { c. To decrease Unearned Revenue } \\\hline \text { d. To increase Accounts Receivable } \\\hline \text { e. To increase Common Stock } \\\hline \text { f. To decrease Notes Payable } \\\hline \text { g. To increase Prepaid Rent } \\\hline \text { h. To increase Salaries Expense } \\\hline \text { i. To increase Accounts Payable } \\\hline \text { i. To decrease Prepaid Insurance }\\\hline \end{array}$

A company's ledger is:

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

___________________ are promises of payment from customers to sellers.

The right side of an account is called the debit side.

The trial balance can serve as a replacement for the balance sheet, since total debits must equal total credits.

The process of transferring general journal entry information to the ledger is called:

An asset created by prepayment of an insurance expense is:

Booth Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%.

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then common stock and dividends, followed by revenues and expenses.

Dividends paid to the stockholders are a business expense.

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

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?

What is a trial balance? What is its purpose?

Crediting an expense account decreases it.

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. $\begin{array}{|l|l|cc|} \hline \text { Account Title } & \text { Account Type } & \text { Normal Balance } \\ &&\text { Debit or Credit) }\\ \hline \text { a. Prepaid Insurance} & \text { } & \text { }\\\hline \text { b. Accounts Payable } & \text { } & \text { }\\ \hline\text { c. Common Stock } & \text { } & \text { }\\\hline \text {d. Utilities expense } & \text { } & \text { }\\\hline \text { e. Land} & \text { } & \text { }\\ \hline\text { f. Services revenue } & \text { } & \text { }\\\hline \text { g. Notes Receivable} & \text { } & \text { }\\\hline \text { h. Advertising expense} & \text { } & \text { }\\ \hline\text { i. Unearned Revenue } & \text { } & \text { }\\\hline \text { i. Service Revenue } & \text { } & \text { }\\\hline\end{array}$