ACCT chp 2

3. The left side of an account is used to record which of the following? a. Debit or credit, depending on the type of account b. Increases c. Credits d. Debits

d

4. Which of the following statements is correct? a. Prepaid Expenses are decreased with a debit. b. Unearned Revenue is increased with a debit. c. Rent Expense is increased with a credit. d. Accounts Payable is increased with a credit.

d

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). 1. Rent Expense 6. Accounts Payable 2. Common Stock 7. Unearned Revenue 3. Furniture 8. Notes Receivable 4. Service Revenue 9. Dividends 5. Prepaid Insurance 10. Insurance Expense

1. E 2. E 3. A 4. E 5. A 6. L 7. L 8. A 9. E 10. E

For each account, identify if the change would be recorded as a debit (DR) or credit (CR). 11. Increase to Cash 16. Increase to Interest Revenue 12. Decrease to Accounts Payable 17. Increase to Rent Expense 13. Increase to Common Stock 18. Decrease to Office Supplies 14. Increase to Unearned Revenue 19. Increase to Prepaid Rent 15. Decrease to Accounts Receivable 20. Increase to Notes Payable

11. DR 12. DR 13. CR 14. CR 15. CR 16. CR 17. DR 18. CR 19. DR 20. CR

23. Using the following accounts and their balances, calculate the debt ratio for Cooper Furniture Repair as of December 31. Cash $ 7,000 Advertising Expense $ 1,200 Unearned Revenue 4,500 Utilities Expense 800 Equipment 10,000 Rent Expense 5,000 Service Revenue 8,000 Accounts Payable 2,300 Common Stock 12,200 Dividends 3,000

Total assets = +7,000 + +10,000 = +17,000 Total liabilities = +2,300 + +4,500 = +6,800 Debt ratio = Total liabilities / Total assets = +6,800 / +17,000 = 0.40 = 40%

1. The detailed record of the changes in a particular asset, liability, or stockholders' equity is called a. an account. b. a journal. c. a ledger. d. a trial balance.

a

9. Which sequence correctly summarizes the accounting process? a. Journalize transactions, post to the accounts, prepare a trial balance b. Journalize transactions, prepare a trial balance, post to the accounts c. Post to the accounts, journalize transactions, prepare a trial balance d. Prepare a trial balance, journalize transactions, post to the accounts

a

10. Nathville Laundry reported assets of $800 and equity of $480. What is Nathville's debt ratio? a. 60% b. 40% c. 67% d. Not enough information is provided

b

5. Your business purchased office supplies of $2,500 on account. The journal entry to record this transaction is as follows: Office Supplies Accounts Receivable 2,500 a. 2,500 Office Supplies Accounts Payable 2,500 b. 2,500 Accounts Payable Office Supplies 2,500 c. 2,500 d.Cash 2500 Accounts Payable 2,500

b

6. Sedlor Properties purchased office supplies on account for $800. Which journal entry records the payment on account of those office supplies? Accounts Payable Accounts Receivable 800 a. 800 Accounts Payable Cash 800 b. 800 Cash Accounts Payable 800 c. 800 d. Office Supplies 800 Cash 800

b

8. Pixel Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable. What will the trial balance show for this error? a. Cash is overstated b. Liabilities are overstated c. Expenses are overstated d. The trial balance will not balance

b

2. Which of the following accounts is a liability? a. Accounts Receivable b. Service Revenue c. Unearned Revenue d. Prepaid Rent Expense

c