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Exam 2: Accounting System and Financial Statements

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Question 91

Multiple Choice

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A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n) :

A) Journal.
B) Posting.
C) Trial balance.
D) Account.
E) Chart of accounts.

F) A) and E)
G) A) and D)

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Question 92

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Debit means increase and credit means decrease for all accounts.

A) True
B) False

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Question 93

Multiple Choice

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Blade, Inc. has the following account balances at Dec 31 of the current year. What is the correct missing balance for Retained Earnings?

All of the following are asset accounts except:

Indicate whether a debit or credit entry would be required to record the following changes in each account. a. To decrease Cash. b. To increase Common Stock. c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Dividends.

Identify the statement below that is correct.

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

At a given point in time, a business's trial balance is a list of all of its general ledger accounts and their balances.

A business's source documents may include all of the following except:

On January 1 of the current year, Jimmy's Sandwich Company, Inc. reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the business paid $20,000 to the stockholders. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in stockholders' equity during the year was:

The debt ratio is calculated by dividing total assets by total liabilities.

The following accounts appear on either the Income Statement (IS) or Balance Sheet (BS). In the space to the left of each account, write the letters, IS or BS to identify the statement on which the account appears. ____ 1. Office Equipment ____ 2. Rent Expense ____ 3. Unearned Fees Revenues ____ 4. Rent Expense ____ 5. Accounts Payable ____ 6. Common Stock ____ 7. Fees Revenue ____ 8. Cash ____ 9. Notes Receivable ____ 10. Wages Payable

A customer's promise to pay on credit is classified as an account payable by the seller.

The numbering system used in a company's chart of accounts:

Identify the statement that is incorrect.

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

Describe what source documents are and the purpose they serve in a business.

Which financial statement reports an organization's financial position at a single point in time?

A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

Masterworks purchased $17,000 of Equipment by signing a promissory note. The correct journal entry to record this transaction is: