Accounting Final Review # 2
The process that begins with recording business transactions and includes the completion of the financial statements is the:
accounting cycle.
Extreme Home bought painting equipment on account for $3,000. The entry would include:
debit to Equipment, $3,000; credit to Accounts Payable, $3,000.
An $1,000 check written for supplies was journalized and posted as $200. The entry to correct this error is:
debit Supplies, $800; credit Cash, $800.
Crystal Clear Imagery received and paid a utility bill for $300 for the month of November. This transaction will:
decrease Cash and increase Utility Expense.
The payment of accounts payable would:
decrease both assets and liabilities.
To correct an error made in the journal (prior to posting in the ledger):
None of the above is correct.
The proper sequence used in recording a business transaction is:
analyze, journalize, post, record the account balance, and complete the reference column in the journal.
The first step of the accounting cycle is:
analyzing business transactions.
Given the following list of accounts with normal balances, what are the trial balance totals of the debits and credits? Cash $1,500 Accounts Receivable 800 Capital 2,200 Accounts Payable 900 Service Fees Earned 1,400 Rent Expense 2,200
$4,500 debit, $4,500 credit
Accounts Payable had a normal starting balance of $800. There were debit postings of $300 and credit postings of $200 during the month. The ending balance is:
$700 credit.
If total liabilities are $41,000 and owner's equity is $35,000, the total assets must be:
$76,000.
If total liabilities are $3,000 and total assets are $12,000, owner's equity must be:
$9,000.
The Accounts Receivable account has total debit postings of $2,400 and credit postings of $1,500. The balance of the account is:
$900 debit.
What is X-cel Company's net income or net loss if it had Revenue of $1,900, Salary Expense of $400, Utility Expense of $550, and Withdrawals of $2,000 during October?
$950 net income
What is a proper entry to show the owner making an investment in the company?
A debit to Cash and a credit to Capital
Which of the following is NOT an asset?
Accounts Payable
An account that would be increased by a credit is:
Accounts Payable.
What would be the effect on the accounts if the business received the telephone bill but did not pay it immediately?
An expense would be debited and a liability credited.
The purchase of supplies for cash would affect which account category?
Assets
How does the purchase of supplies on account affect the accounting equation?
Assets increase; liabilities increase
Which of the following is prepared last?
Balance Sheet
Which of the following items are on both the balance sheet and the statement of owner's equity?
Capital
Vic's Mart collects $200 of its accounts receivable. The expanded accounting equation impact is:
Cash increases and Accounts Receivable decreases $200.
Which financial statement is prepared first?
Income Statement
How are credits distinguished from debits in the journal?
Indenting
Which of the following is NOT a type of business organization?
Information Technology
Which is an advantage of a sole proprietorship form of business?
The owner makes all the decisions.
Which of the following entries would record the payment of a utility bill?
Utilities Expense, debit; Cash, credit
A debit to the Capital account was posted to an expense account. This would cause:
expense to be overstated.
Business transactions are first recorded in the:
journal.
A credit to a liability account was posted to the capital account. This would cause:
liabilities to be understated.
Assets are equal to:
liabilities + owner's equity.
If beginning capital was $140,000, ending capital is $90,000, and the owner's withdrawals were $21,000, the amount of net income or net loss was:
net loss of $29,000.
A debit to an expense account was posted as a debit to a revenue account. This error would cause:
revenue to be understated.
A law firm would be considered a:
service company.
