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Exam 2: Analyzing and Recording Transactions

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Question 91

Multiple Choice

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Identify the account below that is classified as an asset in a company's chart of accounts:

A) Accounts Payable
B) Accounts Receivable
C) Owner's Capital
D) Unearned Revenue
E) Service Revenue

F) A) and E)
G) All of the above

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Question 92

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) $\begin{array} { | l | l | l | } \hline \text { No journal entry is required } & & \\\hline & & \\\hline\end{array}$
B) $\begin{array} { | l | r | r | } \hline \text { Utilities Expense } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$
C) $\begin{array} { | l | r | r | } \hline \text { Utilities Expense } & 400 & \\\hline \text { Accounts Payable } & & 400 \\\hline\end{array}$
D) $\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}$
E) $\begin{array} { | l | r | r | } \hline \text { Cash } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}$

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

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Question 93

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

The numbering system used in a company's chart of accounts:

Based on the following trial balance for Barry's Automotive Shop, prepare an income statement, statement of owner's equity, and a balance sheet. Barry made no additional investments in the company during the year. Barry's Automotive Shop Trial Balance December 31 $\begin{array}{|l|c|c|}\hline \text { Cash } & \$ 12,500 \\\hline \text { Accounts receivable } & 1,500 \\\hline \text { Supplies } & 500 \\\hline \text { Repair shop equipment } & 27,000 \\\hline \text { Service truck } & 33,000 \\\hline \text { Accounts payable } &&\$2,600 \\\hline \text { Barry, Capita } &135&38,525 \\\hline\end{array}$ $\begin{array} { |l | r | r |} \hline \text { Barry. Capital } & & 38,525 \\\hline \text { Barry. Withdrawals } & 36,000 & \\\hline \text { Service revenue } & & 125,000 \\\hline \text { Supplies expense } & 3,425 & \\\hline \text { Rent expense } & 18,000 & \\\hline \text { Udilities expense } & 5,000 & \\\hline \text { Gas expense } & 7,200 & \\\hline \text { Wages expense } & 22,000 & \\\hline \text { Totals } & \$ 166,125 & \$ 166,125 \\\hline\end{array}$

For each of the following accounts, identify whether a debit or credit yields the indicated change a. To increase Fees Earned b. To decrease Cash c. To decrease Unearned Revenue d. To increase Accounts Receivable e. To increase Owner, Capital f. To decrease Notes Payable g. To increase Prepaid Rent h. To increase Salaries Expense i. To increase Accounts Payable j. To decrease Prepaid Inswranee

Posting is the transfer of journal entry information to the ledger.

A company's ledger is:

At the end of its first month of operations, Michael's Consulting Services reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The owner's total investment for this first month was $5,000. There were no owner withdrawals in the first month. Calculate the ending balance in the Owner's Capital account to be reported on the Statement of Owner's Equity.

A double-entry accounting system is an accounting system:

Identify the accounts that would normally have balances in the credit column of a business's trial balance

Jason Hope decided to open a hotel in his hometown. Prepare journal entries to record the following transactions. Hope uses the accounts Room Rental Revenue and Event Revenue. All expenses for special events are recorded as Event Expense. (Omit explanations.) $\begin{array} {| l | l |} \hline \text { June 1 } & \text { Hope invested } \$ 400,000 \text { into the business } \\\hline \text { June 2 } & \begin{array} { l } \text { Hope purchased an existing building and land for the hotel costing } \$ 900,000 . \\\text { The purchase appraisal allocated } \$ 100,000 \text { for land and } \$ 800,000 \text { to the } \\\text { building. Hope paid } \$ 250,000 \text { and financed the remainder with a mortgage } \\\text { note payable. }\end{array} \\\hline \text { June 3 } & \text { Paid } \$ 6,000 \text { for a six month insurance policy on the hotel. } \\\hline \text { June 5 } & \text { Purchased linens and other supplies costing } \$ 4,000 \text { on account. } \\\hline \text { June 10 } & \begin{array} { l } \text { Received advance payments of } \$ 12,000 \text { from customers that will be staying a } \\\text { the hotel in July. Payments will be refunded if the customer cancels within 7 } \\\text { days of their scheduled arrival time. }\end{array} \\\hline\end{array}$ $\begin{array} { | l | l | } \hline \text { June } 14 & \begin{array} { l } \text { Received cash payments of \$13,000 from current customers staying at the } \\\text { hotel in June. }\end{array} \\\hline \text { June 15 } & \text { Paid the staff \$2,000 for the first semi-monthly payroll. } \\\hline \text { June 16 } & \text { Paid \$500 for general maintenance and repairs expense. } \\\hline \text { June 17 } & \text { Received \$10,000 payment for a wedding reception during the weekend } \\\hline \text { June 18 } & \begin{array} { l } \text { Paid the caterer \$2,500 for providing catering services for the wedding } \\\text { reception. }\end{array} \\\hline \text { June 18 } & \text { Paid Fixture Rentals \$1,000 for table and chair rental. } \\\hline \text { June 19 } & \text { Paid the florist \$2,000 for flowers for the event. } \\\hline \text { June 24 } & \text { Paid for the linens and supplies purchased on June 5. } \\\hline \text { June 25 } & \text { Recorded an additional \$5,000 from current hotel customers for June. } \\\hline \text { June 30 } & \text { Paid the staff \$2,000 for the second semi-monthy payroll. } \\\hline \text { June 30 } & \text { The owner withdrew \$4,000 for persongl use. } \\\hline\end{array}$

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Which of the following statements is not true:

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?

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the__________ .

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

Identify the item below that would cause the trial balance to not balance?

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.