Accounting 1

The company's cash balance at the beginning of the month was $2,600. Insurance for the year was purchased for $1,200 and rent of $800 for the month was paid. What is the cash balance at the end of the month if total service revenues were $3,700, but only $500 was collected and the rest was on account?

$1,100 Cash beginning balance $2,600 - $1,200 - $800 + $500 = $1,100 Cash ending balance.

Assume the running balance for Accounts Receivable is a debit balance of $2,250. The business received $750 from a client for services performed on account. After journalizing and posting this transaction to the ledger, what is the new running balance of Accounts Receivable?

$1,500, debit Because the beginning debit balance of $2,250 is reduced by a credit of $750 to record the payment received. $2,250 - $750 = $1,500.

A transaction is journalized on page 6 as a debit, Wages Expense, $500 and a credit, Cash, $500. When you review the chart of accounts, you see that Wages Expense is account 511 and Cash is account 101. You prepare to post the journal entry to the ledger. Wages Expense has no account balance, and Cash has a debit balance of $6,250. Determine the entries for (1) the posting reference in the journal for the debit, (2) the posting reference in the ledger for the cash account, and (3) the new balance in the cash account.

(1) Journal Post. Ref.: 101; (2) ledger Post. Ref.: 6; (3) debit balance: $5,750

Which of the following best describes a journal?

A day-by-day listing of transactions of the business

Rosewell Florist received a utility bill from Staygreen Electric Company for $325, which it paid right away. This transaction would include which of the following entries to Rosewell's accounts?

A debit to Utility Expense of $325

What does a posting reference in a journal indicate?

A posting reference in a journal indicates that a journal entry has been posted to the general ledger.

Which of the following best describes a general ledger?

A record of the transactions entered in each account

Which of the following statements about a trial balance is not true?

A trial balance and balance sheet are interchangeable; companies can report using either.

In which of the following steps of the accounting process is the decision made about whether or not an event results in an accounting entry?

Analyzing

Which of the following is the correct order of steps in the accounting process?

Analyzing, recording, classifying, summarizing, reporting, interpreting

Which of the following is a list of accounts used by a business?

Chart of accounts

What is a list of accounts used by a business?

Charts of Accounts

Bernick invested cash in the business, $15,000. What is the journal entry?

Date; Account Title (Cash); Debit ($15,000); Credit ($0.00)

What is the normal balance side for an asset account?

Debit side

Which of the following statements regarding journal entries is true?

Each entry must contain at least one debit and one credit

Which of the following explains the rules that FASB recommends for treatment of an accounting event?

Exposure Draft

In which step of the accounting process does reporting occur?

Fifth step

Which of the following statements regarding the cash account is true?

It increases with debits

Which of the following is posted to the general ledger?

Journal entries

Assets are on which side of the accounting equation?

Left side

On the right side of the equation. Therefore, increases are entered on the right (credit) side, and decreases are entered on the left (debit) side.

Liabilities and owner's equity

Which of the following users needs detailed measures of the business's performance?

Managers

What is the net effect when an asset is purchased with cash?

No net effect to assets; they remain the same

Which of the following would produce a trial balance that is not balanced?

Only the debit, or only the credit, but not both parts of the transaction were recorded.

Under which ownership structures are the owners' personal assets at risk of being taken by creditors?

Partnerships and sole proprietorships

Assume a $500 payment for Phone Expense was incorrectly journalized as a debit to Phone Expense of $50 and a credit to Cash of $50. Which of the following would be the appropriate correcting entry?

Phone Expense 450 Cash 450

Assume that you own a landscaping business and have decided to build a new equipment shed. You go to a lumber yard to pick up materials. In the sales office, a sales agent helps you determine the materials that you will need and creates an invoice. You pay for the materials with a check, and the sales agent gives you an itemized receipt and tells you where to pick up the materials. Which of the following items is most likely to be required by the lumber yard attendant before you can leave with the materials?

Receipt

What increases owner's equity. Revenues could be recorded directly on the credit side of the owner's capital account.

Revenue

Which of the following types of accounts have a normal credit balance?

Revenues and liabilities

To credit an account means to enter an amount on the

Right side

Which of the following best describes GAAP?

Rules for firms to follow when preparing financial statements

Assume that you are the owner of a florist business. Which of the following source documents would you review to determine the flower arrangements and plants sold for the day?

Sales tickets

Under which ownership structure does an owner enjoy the most decision-making power?

Sole proprietorship

You are the accounting clerk for a plumber. You review the April 25 daily sales invoices amounting to $675, of which $300 was received and the remainder was on account. Which of the following statements about this transaction is true?

The transaction would be recorded as a compound entry.

A correcting entry is not required if

a transaction has been correctly journalized but posted incorrectly

Businesses use a separate __________ to record the increases and decreases in each type of asset, liability, owner's equity, revenue, and expense.

account

Which of the following would not produce an error in the trial balance?

an error in the source documents

Asset and expense accounts normally have a. large balances. b. debit balances. c. credit balances. d. negative balances.

b. debit balances

Payment of a telephone bill represents an increase in a(n) a. revenue. b. expense. c. liability. d. asset.

b. expense

The standard T account includes all of the following EXCEPT a. a debit side. b. the current date. c. a credit side. d. a title.

b. the current date

The difference between the footings on the debit and credit sides of the T account is known as the:

balance

Recording only one part of the transaction would result in debits not equaling credits. Omitting transactions, recording amounts in the wrong accounts, or recording wrong amounts—as long as the debits equal credits—will still result in a __________ __________ _______________

balanced trial balance

Question Content Area Liability, owner's capital, and revenue accounts normally have a. large balances. b. debit balances. c. credit balances. d. negative balances.

c. credit balances

Checks that have been written and cleared in a bank account are called canceled checks, and they provide information about

cash payments

The purpose of producing a trial balance is to

check that the debit and credit totals are equal.

The highest amount of revenue is earned by

corporations

Owner's equity is increased with a _____________

credit

The drawing account is decreased by entering a ____________

credit

The equipment account is decreased with a

credit

The fees earned account is increased with a

credit

The owner's capital account is increased with a

credit

Liability and owner's capital accounts are increased with:

credits

Payment of office rent represents a decrease in a. a revenue account. b. expenses. c. a liability account. d. cash.

d. cash

An increase in an asset account may be offset by a(n) a. increase in an expense account. b. decrease in a liability account. c. decrease in owner's equity. d. increase in owner's equity.

d. increase in owner's equity

The capital account a. increases with increased expenses. b. decreases with increased revenue. c. has a normal balance of a debit. d. increases when the owner invests money in the business.

d. increases when the owner invests money in the business

An asset account is increased with a __________

debit

The accounts payable account is decreased with a

debit

The prepaid insurance account is increased by entering a

debit

The wages expense account is increased with a

debit

To place an amount on the left-hand side of the T account is to ____________ the account.

debit

The total dollar amounts of the debit and credit sides of a T account are known as:

footings

A normal balance is the side of an account that is used to __________ the account.

increase

Revenues __________ owner's equity. Specific revenue accounts are ____________ when revenue is earned. Liabilities accounts are increased with a credit.

increase ; credited

Source documents

indicate that a transaction has occurred

An advantage of a general ledger is that

it maintains a running balance of each account

Accounting information is used by managers to

making operating decisions.

After an individual makes a bank deposit, the teller hands him a deposit slip, which will provide proof of

monies added to the individual's bank account

The process of copying the dates and dollar amounts from the journal to the ledger is known as

posting

Liabilities and owner's equity are on which side of the accounting equation?

right side

You have just received an electric bill for $225. This is evidence of

services received from a provider.

Business transactions are recorded in the general journal using information from the

source documents and the chart of accounts

A trial balance is prepared to

test that debits equal credits

The chart of accounts of XYZ Company includes the following accounts: 101 Cash; 210 Wages Payable; 310 Owner, Capital; 401 Sales; and 602 Office Expense. Based on the selected accounts of XYZ Company, the first digit of the account number indicates

the classification of the account

The right side of a T account is known as:

the credit side

A __________ ____________ is not a formal statement or report; normally, only the accountant sees it because it is used as an internal document to aid in preparing the financial statements. It cannot replace a balance sheet.

trial balance