Chapter 2 Accounting
What would be the account balance in the Service Revenue account after the following transactions, assuming a zero beginning balance? Left a bill...4200 Collected Immediately...3500 Billed customer...2200 Preformed services on Acct...6000 Received Partial Payment on Acct...1500
$15,900 $4,200 + $3,500 + $2,200 + $6,000 = $15,900
Given the trial balance amounts below, compute net income. Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640
$19,578 $20,000 - $422 = $19,578
What is the total debits on trial bal? Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640
$199,152 $116,640 + $1,500 + $3,200 + $22,450 + $23,300 + $422 + $31,640 = $199,152
A revenue account normally has a debit balance.
False
Common Stock normally has a debit balance.
False
If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.
False
If a company provides services to a customer on credit, the service provider company should credit Accounts Receivable.
False
Land and buildings are generally recorded in the same ledger account.
False
Transactions are first recorded in the ledger.
False
When a company provides services for which cash will not be received until some future date, the company should record unearned revenue for the amount charged to the customer.
False
A collection of all accounts (with account balances) used by a business is called a:
General Ledger
Source documents include all of the following except:
Ledgers
A written promise to pay a definite sum of money on a specific future date is a(n):
Note Payable
A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:
Recorded as a credit to an unearned revenue account.
An asset created by prepayment of an expense is:
Recorded as a debit to a prepaid expense account.
Of the following accounts, the one that normally has a credit balance is:
Sales Salaries Payable
What would be included on income statement? Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640
Service revenue and utilities expense.
Double-entry accounting is an accounting system:
That records the effects of transactions and other events in at least two accounts with equal debits and credits.
An account balance is:
The difference between the total debits and total credits for an account including the beginning balance.
A debit is used to record:
A decrease in the balance of retained earnings.
Source documents:
Are the origins of accounting information.
Which of the following is a true statement regarding debits and credits?
Assets and expenses are both increased with a debit
Which of the following items would appear on the balance sheet?
Common stock, cash, supplies, prepaid rent, retained earnings, accounts payable, accounts receivable, office equipment, unearned revenue, and shaving equipment.
Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include a:
Credit to Accounts Payable.
Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings. This error was not discovered before the journal entry was posted. What is the correcting entry?
Debit Equipment and credit Buildings for $50,000 each.
What would be the appropriate entry for the following transaction? Bill Co. performed $5,200 in consulting services on account.
Debit to Accounts Receivable, credit to Service Revenue.
Which of the following is the appropriate journal entry if a company performs a service and then bills the customer?
Debit to Accounts Receivable, credit to Service Revenue.
A credit entry:
Decreases asset and expense accounts and increases liability, common stock, and revenue accounts.
A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.
True
A transaction that decreases an asset account and increases a liability account must also affect one or more other accounts.
True
A trial balance that balances is not proof of complete accuracy in recording transactions.
True
An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.
True
As prepaid expenses are used up, the costs of these assets become expenses.
True
Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts: assets, liabilities, equity, revenues, and expenses.
True
The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.
True