CH 2 SmartB

Sunshine Company received and paid for a utility bill of $50. Show how to record this transaction by selecting the correct answer below.

$50 on left side of the Utility expense account; $50 on the right side of the Cash account.

Illustrate how the financial statements are linked by placing them in the correct order of preparation.

1. income statement 2. statement of retained earnings 3. balance sheet

Major Programming receives $5,000 cash in advance of providing programming services to a customer. Describe how to record the transaction by completing the following sentence. Cash would be (debited/credited) on the (left/right) side of the T-account, and Unearned Programming Revenue would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

R&R Programming pays a $900 supply bill that it had received earlier in the month. Illustrate how to record the transaction by completing the following sentence. Accounts payable would be (debited/credited) on the (left/right) side of the T-account, and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

A trial balance is a(n) (list/balance/chart) of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of account balances. Use one word for each blank.

Blank 1: list Blank 2: credit

J. Jackson invested $1,000 in his business in exchange for common stock. Show how to record this transaction by selecting the correct answer below.

Debit Cash; credit Common stock

Which of the following statements is (are) correct regarding the posting process? (Check all that apply.)

Entries must be posted to the ledger before financial statements are prepared. The posting process does not require detailed explanations in the ledger. Entries are posted as soon as possible. The posting process creates a link between the ledger and the journal.

Review each of the following statements to determine which is correct regarding the importance of assessing a company's risk of paying debt. (Check all that apply.)

If a company has a lot of debt, they may not be able to afford to take on new debt. A company's required debt payments may be greater than its ability to generate money to make those payments. A company that finances their assets by borrowing will need to make enough money to pay off the debt.

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Total liabilities/Total assets

Dollar signs are _____ in journals and ledgers.

not used

Financial statements are prepared from a(n)

trial balance

Gunner Company purchased a piece of equipment costing $6,000. She paid $1,000 immediately and put the rest on account. Show how to record this transaction by selecting the correct answer below.

$6,000 on left side of the Equipment account; $5,000 on the right side of the Accounts payable account; $1,000 on the right side of the Cash account.

You are entering a transaction in the journal. Place the following steps in the order that they would be entered in the journal.

1. Enter date of transaction in date column 2. enter name of account(s) debited and their amounts 3. enter name of accounts credited and their amounts 4. enter explanation

When preparing a trial balance, there are certain steps that need to be followed. Place the following steps in the correct order.

1. list each account title and its amount from the general ledger. 2. compute the total of debit balances and total of credit balances. 3. verify that total debit balances equal total credit balances.

Recall the required information in a financial statement heading. Rearrange the following line items as they would appear in a heading.

1. name of business 2. name of financial statement 3. period of time the financial statement covers

List the steps to search for an error when the trial balance does not balance.

1. verify that trial balance columns are correctly added. 2. verify that account balances are accurately entered from the ledger. 3. determine if debit or credit balance is mistakenly listed in the trial balance as a credit or debit. 4. recompute each account balance in the ledger 5. verify that the original journal entry has equal debits and credits.

Which of the following statements is (are) correct regarding the Balance column in a ledger (or Balance column account)?

A balance column account is similar to a T-account. Immediately after posting a transaction, the balance of the account is written in the Balance column.

Choose the statement below that correctly explains a general journal..

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

Which of the following statements is (are) correct regarding a journal? (Check all that apply.)

A journal is used to record business transactions. In a journal, both the debit and credit side of the transaction can be seen. Transactions are generally entered in chronological order.

In defining a reporting period, which of the following statements is (are) correct? (Check all that apply.)

A one-year reporting period is known as the fiscal year. A reporting period can be one month, one quarter or one year. A reporting period is determined by the business.

Which of the following statements explains what a trial balance is?

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

1. Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits

Brown Company provided services to a customer and immediately collected $1,900 cash. Show how to record the transaction by completing the following sentence. Service Revenue would be (debited/credited) on the (left,/right) side of the T-account, and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

Brown Company purchased $900 of supplies on credit. Illustrate how to record the transaction by completing the following sentence. Accounts payable would be (debited,/credited) on the (left/right) side of the T-account, and Supplies would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

Holt Computer Services received $200 from a customer that it had billed earlier in the month. Illustrate how to record the transaction by completing the following sentence. Accounts receivable would be (debited/credited) on the (left/right) side of the T-account, and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

Pintel Company paid $2,000 cash for a 12 month insurance policy. Describe how to record the transaction to the T-accounts by completing the following sentence. Cash would be (debited/credited) on the (left/right) side of the T-account, and Prepaid Insurance would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: credited Blank 2: right Blank 3: debited Blank 4: left

On Jan. 2, Callie Company received a $700 payment from a customer previously billed for services performed. The journal entry to record this transaction would include (debit, credit) to the____ account and a (debit, credit) to the Accounts Receivable account.

Blank 1: debit Blank 2: cash Blank 3: credit

On Jan. 2, Callie Company performed $800 worth of services for a client. The client paid $800 immediately, The journal entry to record this transaction in Callie Company's books would include a (debit/credit) to the Cash account; and a (debit/credit) to the Service revenue account.

Blank 1: debit Blank 2: credit

A business paid $40 in dividends. Show how to record the transaction by completing the following sentence. Dividends would be (debited/credited) on the (left/right) side of the T-account. and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Brown Company paid $40 in cash dividends. Show how to record the transaction by completing the following sentence. Dividends would be (debited/credited) on the (left/right) side of the T-account, and Cash would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Brown Company paid its employee his weekly wages of $400. Show how to record the transaction by completing the following sentence. The Wages expense account would be (debited/credited) on the (left/right) side of the T-account, and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Butter Company purchased $300 of supplies for cash. Illustrate how to record the transaction by completing the following sentence. The Supplies account would be (debited/credited) on the Blank 2Blank 2 left , Correct Unavailable(left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Holt Computer Services purchased $2,000 of new equipment and paid immediately. Illustrate how to record the transaction of Holt Services by completing the following sentence. The Equipment account would be debited/credited) on the (left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

L. Lyons started a business and invested $4,000 in exchange for common stock. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be (debited/credited) on the (left/right) side of the T-account and the Common stock account would be (debited/credited) on the (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

Which of the statements below is true regarding the statement of retained earnings?

Both the beginning and ending retained earnings balances are reported on the statement.

On Mar 3, Lyons Company received $100 cash in advance of providing catering services to a customer. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry

Cash would be debited and listed first Unearned Revenue would be credited and listed second

On Jan. 2, Callie Company purchased $300 worth of supplies. She paid $100 immediately, but put the rest on account. The journal entry to record this transaction in Callie Company's books would include which of the following? (Check all that apply.)

Credit the Cash account for $100. Credit Accounts payable for $200. Debit the Supplies account for $300.

Select the statements below that are correct in regards to entering transactions in a journal. (Check all that apply.)

Credited accounts should be indented. Total dollar amount of debits must equal the total dollar amount of credits

Paul's Programming Services paid $100 dividends. Show how to record this transaction by selecting the correct answer below.

Debit Dividends; credit Cash

Paul's Programming Services paid $100 in cash dividends. Show how to record this transaction by selecting the correct answer below.

Debit Dividends; credit Cash.

Which of the following is required information when entering a transaction into a journal?

Debited accounts Date of the transaction Credited accounts Explanation of transaction

When entering a transaction into a general journal, the entry would be dated; then the accounts_____would be listed first; then the accounds___credited would be listed next and finally a ____would be included to show the details of the transaction.

Debited, credited, description

Which of the following would be included on a statement of retained earnings? (Check all that apply.)

Dividends Retained earnings at end of period Net income (loss) Retained earnings at beginning of period

Describe where dollar signs are appropriate in financial statements.

Dollar signs are used beside the first and last numbers in a column.

Stan Programming Services provided $8,000 of services and received payment immediately. Show how to record this transaction by selecting the correct answer below.

Enter $8,000 on left side of Cash; enter $8,000 on the right side of Service revenue.

Smith Company purchased $8,000 of supplies on credit. Show how to record this transaction by selecting the correct answer below.

Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account.

Which of the following is a correct statement regarding the posting process?

Entries must be posted to the ledger before financial statements are prepared.

Which of the following items is (are) required in the heading of every financial statement? (Check all that apply.)

Name of the financial statement Name of the business Date or period of time covered

Lenten Company paid $1,200 for insurance coverage for the next year. Show how this transaction should be recorded by Lenten Company, by selecting the correct answer below.

Place $1,200 on the left side of the Prepaid Insurance account; place $1,200 on the right side of the Cash account.

Gunner Corporation received $300 cash from a client that had been billed earlier in the month. Show how to record this transaction by selecting the correct answer below.

Place $300 on left side of the Cash account; place $300 on the right side of the Accounts receivable account.

Gunner Company made a $50 payment on account for a previous equipment purchase. Show how this transaction should be entered into the accounts of Gunner Company, by selecting the correct answer below.

Place $50 on left side of the Accounts payable account; place $50 on the right side of the Cash account.

Minor Games received a $500 payment for services to be provided in the future. Show how this transaction should be entered into T-accounts of Minor Games, by selecting the correct answer below.

Place $500 on the left side of the Cash account; place $500 on the right side of the Unearned Revenue account.

Which of the following financial statements reports the financial position of a business at a point in time?

Statement of retained earnings Statement of cash flows Income statement

On Nov.1, Lyons Company pays $2,400 cash for supplies. Show how to record this transaction by selecting the correct answer below.

Supplies would be debited, and Cash would be credited.

Which of the following statements are correct regarding how the financial statements are linked? (Check all that apply.)

The ending balance in the retained earnings account is carried to the balance sheet. Net Income from the income statement is carried to the statement of retained earnings.

Which of the following statements best explains the posting reference in a journal and a ledger?

The posting reference creates a link between the journal and the ledger.

Which of the following statements is (are) true regarding the balance sheet? (Check all that apply.)

The report date includes a single calendar day. It reports the financial position at a point in time. It depicts the equality of the accounting equation.

Recall that the Balance Sheet reports the equality of the accounting equation and would include which of the following amounts?

Total Liabilities Total Assets Retained earnings balance at end of period

Which of the following would be included on an income statement? (Check all that apply.)

Total revenues Total expenses Net income

Name the accounting document or report that is completed just prior to preparing financial statements and assists in preparing the financial statements.

Trial balance

True or false: At the end of the period, the assets will still equal the liabilities plus equity.

True Assets will always equal liabilities plus equity.

True or false: The revenue recognition principle states that revenue should be recorded in the period in which it is earned which may or may not be the period in which payment was actually received.

True Reason: Revenue should always be recorded in the period in which the service is performed or product is sold. The actual cash payment may be received before (unearned revenue) or after the period (accounts receivable) in which the revenue is earned.

Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)

Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances. List each account title and its amount from the ledger.

1. When a business provides a service to a customer "on credit", it means that: (Check all that apply.)

an asset has been created or increased. Accounts Receivable will be increased. the business will receive payment for its services at a later time.

The balance sheet reports:

assets, liabilities and the ending retained earnings balance

A posting reference in a (journal/ledger) includes the page number of the account debited or credited in the (journal/ledger) and serves as a link to cross-reference the transaction from one record to another.

blank 1: ledger blank 2: journal

On Jan. 2, Callie Company received a $700 payment from a customer previously billed for services performed. The journal entry to record this transaction would include a (debit, credit) to the account and a (debit, credit) to the Accounts Receivable account.

debited cash account credit

Analyzing the accounting equation at the end of the month will reveal the following. Select all that apply.

revenues and expenses will change the equity account assets = liabilities + equity

An efficient way to search for an error causing the trial balance to not be in balance is to check the journalizing, posting, and trial balance preparation in order.

reverse

According to the revenue recognition principle, revenue is to be recognized when:

the product or service is provided

An income statement reports:

the revenues less the expenses incurred by a business