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Exam 2: Analyzing for Business Transactions

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Question 111

Multiple Choice

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A debit is used to record which of the following:

A) A decrease in an asset account.
B) A decrease in an expense account.
C) An increase in a revenue account.
D) An increase in a contributed capital account.
E) An increase in the dividends account.

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

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Question 112

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At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances

A) True
B) False

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Question 113

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Using the following list of accounts and identification letters A through J for Homer's Management Co., Inc., enter the type of account and its normal balance into the table below. The first item is filled in as an example:

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

The business paid $100 cash dividend to Charles Nice (the sole stockholder of the corporation). Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

Jerry's Butcher Shop, Inc. had the following assets and liabilities at the beginning and end of the current year: $\begin{array}{llcc} & \text { Assets} &\text { Liabilities }\\ \text { Beginning of the year ............ } &\$114,000& \$68,000\\ \text { End of the year ......................} &135,000&73,000\\\end{array}$ If Jerry made no investments in the business but withdrew $5,000 during the year, what was the amount of net income earned by Jerry's Butcher Shop, Inc.?

Identify each of the following accounts

Debits increase asset and expense accounts.

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Explain the recording and posting processes.

Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

Identify the account below that impacts the Equity of a business:

Identify the statement that is incorrect.

At the end of its first month of operations, Michael's Consulting Services, Inc. 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 stockholders' total investment for this first month was $5,000. Calculate the ending balance in Stockholders' Equity to be reported on the Balance Sheet.

Explain how accounts are used in recording information about a business's transactions.

_____________ and ______________ are the starting points for the analyzing and recording process.

Geraldine Parker, the owner of Gi Gi's Dance Studio, Inc., started the business by investing $10,000 cash and donating a building worth $20,000. Identify the general journal entry below that Gi Gi's will make to record the transaction.

During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?

A debit entry is always an increase in the account.

The balances for the accounts of Milo's Management Co., Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. $\begin{array}{c}\begin{array}{lr}\text { Accounts payable..... } & \$ 6,500 \\\text { Accounts receivable... } & 7,000 \\\text { Cash ............... } & \text { ? } \\\text { Office supplies. } & 1,200 \\\text { Building ........... } & 125,000 \\\text { Supplies expense..... } & 21,500 \\\text { Common stock ........ } & 118,700 \\\text { Management revenue. } & 175,000 \end{array}\begin{array}{lr} \text { Wages expense}&36,000\\ \text { Rent expense}&6,000\\\\\\ \text { Land}&50,000\\ \text { Unearned management}\\ \text { fees}&4,000\\ \text { Dividends}&48,000\end{array}\end{array}$ Calculate the correct balance for Cash and prepare a trial balance.