ACC 201 exam 1

Clayton's Card Shop's Accounts Payable balance on the April 30th trial balance is $27,000. On May 30th Clayton paid invoices totaling $10,000 and invoiced customers for a total of $8,000. What is the balance of Clayton's accounts payable account on their May 31st trial balance?

$17,000

The accountant for Paul's Pizza has discovered that the Dividends account balance of $10,000 is listed as a credit on the December 31st trial balance. This will cause a ____________ difference between the total debit and credit columns.

$20,000

The following was taken from Novak Electric's December 31st trial balance. On January 10th, the company purchased land for $20,000 by taking out a promissory note. What will Novak's Notes Payable balance be on its January 31st trial balance?

$26,000

Carl's Candy has the following balances on its March 31st trial balance. What is the total of Carl's credit column?

$39,000

Mallard Company's total debit column is $27,000 on its trial balance. The remainder of the trial balance shows Accounts Payable of $3,000 and Service Revenue of $20,000 and Notes Payable is blank. What is the balance for the Notes Payable account if no errors have occurred in the trial balance?

$4000

Sweet Treats Bakery has the following account balances on its most recent trial balance. What would be the total in the credit column?

$48,000

What would be the balance in the Accounts Receivable ledger account after the following entries, debit for $12,000, credit for $9,000 and credit for $1,000, if the beginning balance was $6,000?

$8,000

Renaud Construction's trial balance on November 30th has the following balances. What is the total of Renaud's debit column on November 30th?

$880,000

Which of the following is the correct format for an account title? Why?

Accounts Payable; capitalization indicates that it is a specific account name

A typical ledger would have the following accounts in which order?

Accounts Receivable, Accounts Payable, Retained Earnings, Interest Expense.

What is a T-account?

An alternate form of depicting the general ledger account

What would cause the debit balance to be higher than the credit balance on the trial balance?

An error has been made.

A company used cash to pay suppliers for previously purchased supplies. How would this transaction be recorded?

As a debit to Accounts Payable and a credit to Cash.

An accountant for Nationwide Publishers failed to record the following transaction in the journal: Billed Barnes & Noble $15,000 for books sold. Which of the following would result from this error?

Assets on the balance sheet and net income will be understated.

How do journals and ledgers compare?

Both utilize the convention of recording debits on the left and credits on the right side of an entry.

Cash and Equipment are asset accounts. If equipment is purchased using cash, then

Cash is credited and Equipment is debited.

Using the image as a guide, select the correct accounting labels for the LEFT side of the T-account. (T chart)

Debit

Cash is received for a new business loan. Which of the following is the correct posting for this transaction?

Debit Cash and credit Notes Payable (a liability).

Which is a characteristic of the basic form of a journal entry?

Debit accounts are entered first at the extreme left margin.

Which of the following is true about the trial balance?

Debits are placed on the left and credits are placed on the right.

When the difference in a trial balance is divisible by 9, what has most likely occurred?

Digits have been transposed.

What is a journal useful for? Select the three that apply.

Disclosing in one place the complete effect of a transaction; Locating and preventing errors; Providing a record of transaction

Stockholders' equity with a debit balance is the classification and normal balance of

Dividends

Why do expenses have a normal debit balance?

Expenses decrease Retained Earnings.

Compound entries, though permissible, often contain errors and should be avoided.

False

Which statement is true concerning a simple entry that a company recorded in the general journal?

It contains only two accounts.

What is not a purpose or benefit of a journal?

It ensures that financial statements are always correct.

Suppose that a firm issues a $5,000 note payable in exchange for $5,000 of equipment. What effect would this have on the Notes Payable account?

It would increase the account as a credit.

Select all that apply. The accountant for Harper Plumbing Company failed to record the following transaction in the journal: Billed customers $1,400 for services performed. Select the two of the following that will be errors resulting from this omission.

Net income will be understated; Assets will be understated on the balance sheet.

Karen Pollard owns an ice cream shop. She is in the middle of her accounting period and wants to know the amount of accounts receivable balance. Should the trial balance be analyzed first? Why?

No; the trial balance is only up-to-date at the end of the accounting period.

Which of the following transactions would have three ledger entries - two asset and one liability account?

Purchasing equipment by making a cash down payment and signing a note for the remaining amount.

_____ is considered an account.

Service Revenue

What is used to depict the basic form of an account?

T-account

What effect may result if specific account titles are not used in journalizing?

The financial statements may be not be accurate.

What is the expected result of trial balance?

The sum of the debit column equals the sum of the credit column.

Of the listed options, which one is the LEAST efficient at finding errors?

The tabular system.

The accountant for Jackie's Diner is responsible for journalizing each transaction. The day after the completion of the financial statements at the end of the accounting cycle, Jackie gives the accountant a check she received last week for payment of catering services billed the previous month. Failure to record this check would have which of the following effects?

There will be no net effect to assets, liabilities, or stockholders' equity.

Which of the following is true of a journal entry that is prepared with two credits and one debit?

There will likely be no error, as compound entries are permissible.

Why is a new account created?

To keep a record of increases and decreases in a specific asset, liability, stockholders' equity, revenue, or expense item.

What is the primary purpose of the trial balance?

To prove the mathematical equality of the debit and credit amounts after posting.

Which of the following is true about each transaction?

Total debits must equal total credits.

A debit to an Expense account and a credit to an Asset account would be needed under which of the following circumstances?

Using cash to pay this month's rent.

Under which circumstances would Cash be credited and Equipment, both asset accounts, be debited?

When equipment is purchased for cash

A service company regularly has customers purchase service on credit and then pay their bills later. If customers begin to pay more than what they owe, this will result in

a credit balance in the Accounts Receivable (an asset) account.

Of the following errors, a trial balance would help in detecting only

a transposition error when transferring the debit side of a journal entry to the ledger.

Which of the following are considered to be an 'account' ? Select the two that apply.

accounts receivable; service revenue

Which of the following calculations are needed to determine the balance of Retained Earnings? Select the three that apply.

add revenues; subtract Dividends; subtract Expenses

An individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items is

an account

The Retained Earnings account is increased by

an increase in revenues.

An intentional misstatement can be described as

an unethical irregularity.

When is a trial balance customarily prepared?

at the end of an accounting period

Cash is debited and Notes Payable (a liability account) is credited. Which activity would cause this transaction?

borrowing money

A transaction occurred that increased Cash and Common Stock. As a result,

cash would be debited and Common Stock would be credited.

Which account would most likely have more total credits than total debits?

common stock

Common Stock, revenue, and liability accounts usually have a _____ balance.

credit

When a firm issues paychecks to employees, the posting would include a _____ to the Salaries and Wages Expense account.

debit

The CFO just informed the accountant that the company bought some equipment with Cash obtained through a short-term loan. Which of the following posts would be made for this transaction? Select the two that apply.

debit to equipment; credit to equipment expense

In the ledger, each asset account should have a _____ balance and each liability account should have a _____ balance.

debit; credit

An increase in which of the following will result in a decrease in Retained Earnings? Select the two that apply.

dividends; expenses

Total debits will equal total credits for

each transaction

When journalizing a transaction, which of the following options illustrates the correct order for performing the appropriate steps?

enter debit, enter credit, write explanation

Proving the ________ of the debit and credit amounts after posting is the primary purpose of the trial balance.

equality

A debit is used to increase a(n)

expense account

Being able to easily compare the debits and credits for each journal entry

helps prevent and locate errors

A debit to an asset account indicates a(n) _____ in the asset

increase

Preparing financial statements is a task for which the journal _____ useful.

is NOT

A disadvantage of the tabular system as opposed to T-accounts for recording transactions is that

it is less efficient at finding errors than the debit/credit system.

A characteristic of the basic form of a journal entry is that debit accounts are entered first at the extreme _____ margin.

left

A credit is the normal balance for which of the following accounts? Select the three that apply.

revenue; liabilities; common stock

In the trial balance, credits are placed in the _____ column and debits are placed in the _____ column.

right; left

If the sum of all debit entries for a period equals the sum of all credit entries for the same period, then

the accounting equation will be in balance.

Requiring equal debits and credits is the hallmark of

the double-entry bookkeeping system.

What is indicated when the sum of the debit column equals the sum of the credit column in a trial balance?

the mathematical equality of the accounting equation

Select the two answers that are true concerning an account.

the right side is the credit side ; the left side is the debit side

What are the parts of an account?

the title, the debit side, and the credit side

If a digit has been transposed while posting an entry into the ledger

the trial balance will not balance and the difference will be divisible by 9.

Expenses are debited to increase their value because

they decrease Retained Earnings.

What is the term for an accounting record that includes a list of accounts and their balances at a given point in time?

trial balance

European accounting systems

use the same double-entry system used in the United States.

One of the purposes or benefits of journalizing transactions is to ensure that financial statements are always correct.

False