Chapter 2

The following are selected current month's balances from Morgan, Inc. Accounts Payable - 9,000 Revenue - 11,000 Cash - 3,150 Expenses - 1,600 Furniture - 13,000 Accounts Receivable - 16,000 Common Stock - 7,250 Notes Payable - 6,500 Based on this information, calculate the total amount of credits for the trial balance.

$33,750

The Accounts Payable account of Waterford Inc. has the following postings: 17,000 - debit 8,000- debit 27,000- credit 12,000- credit Calculate the ending balance of the account

14,000 credit

Which of the following is a liability account?

Accounts Payable

A business makes a cash payment of $12,000 to a creditor. Which of the following accounts is credited?

Cash

A business renders services to a client and issues a sales invoice. The amount will be collected from the customer at a later time. Which of the following is true at the time the invoice is issued?

Net income will increase

The account title used for recording a written promise is that a customer will pay the business a fixed amount of money and interest by a certain date in the future is _________.

Notes Receivable

The account title used for recording the payment of rent in advance for an office building is ______

Prepaid Rent

Saturn, Inc. paid the rent for the current month in cash. Which of the following accounts will be used to record the transaction?

Rent Expense

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). Retained Earnings Unearned Revenue Building Interest Revenue Prepaid Advertising

Retained Earnings - E Unearned Revenue - L Building - A Interest Revenue- E Prepaid Advertising - A

Amounts earned from delivering goods or services to customers are called _____

Revenues

A shortened form of the ledger is called a ______

T-Account

A business receives $40,000 for services the it will perform over the next four months. Which of the following accounts is credited?

Unearned Revenue

Which of the following account groups will decrease with a debit?

liabilities and revenues

Which of the following represents the correct flow of accounting data?

transactions occur; source documents are prepared; transactions are analyzed; transactions are journalized and posted

A liability created when a business receives cash from customers in advance of providing services or delivering goods is called an

unearned revenue

Which of the following statements is true of expenses?

Expenses decrease equity, so an expense account's normal balance is a debit balance

Transactions are first record in a _____

Journal

Which one of the following account groups normally has a credit balance?

Liabilities and revenues

Which of the following statements is true of a trial balance?

a trial balance presents data in debit and credit format

When is a trial balance usually prepared?

before the financial statements are prepared