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Exam 2: Analyzing and Recording Transactions

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Question 31

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The balance column in a ledger account is:

A) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.
B) Another name for the withdrawals account.
C) An account entered on the balance sheet.
D) An account used to record the transfers of assets from a business to its owner.
E) A column for showing the balance of the account after each entry is posted.

F) B) and C)
G) A) and E)

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Question 32

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An owner's withdrawal account normally has a debit balance.

A) True
B) False

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Question 33

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The right side of a T-account is a(n) :

The detail of individual revenue and expense accounts is reported on the statement of owner's equity.

Which of the following statements is not true:

Identify the account below that is classified as an asset account:

An account balance is:

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

If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

Mary Martin, the owner of Martin Consulting, withdrew $2,000 cash from the company for personal use. Identify the general journal entry below that Martin Consulting will make to record the transaction. $\begin{array}{l}\text { A) }\\\begin{array} { | l | r | r | } \hline \text { M. Martin, Capital } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}\end{array}$ B) $\begin{array}{|l|r|r|}\hline \text { M. Martin, Withdrawals } & 2,000 & \\\hline \text { M. Martin, Capital } & & 2,000 \\\hline\end{array}$ C) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,000 & \\\hline \text { M. Martin, Withdrawals } & & 2,000 \\\hline\end{array}$ D) $\begin{array}{|l|r|r|}\hline \text { Cash } & 2,000 & \\\hline \text { M. Martin, Capital } & & 2,000 \\\hline\end{array}$ E) $\begin{array}{|l|r|r|}\hline \text { M. Martin, Withdrawals } & 2,000 & \\\hline \text { Cash } & & 2,000 \\\hline\end{array}$

Using the following list of accounts and identification letters A through J for Homer's Management Co., enter the type of account and its normal balance into the table below. The first item is filled in as an example: $\begin{array}{ll}\text { A. Homer, Capital } & \text { F. Prepaid Rent } \\\text { B. Interest Payable } & \text { G. Advertising Expense } \\\text { C. Land } & \text { H. Unearned Rent Revenue } \\\text { D. Homer, Withdrawals } & \text { I. Commissions Earned } \\\text { E. Fees Earned } & \text { J. Notes Receivable }\end{array}$ $\begin{array} { l | c | c | c | c | c } &{ \text { Type of Account } } &&& { \text { Normal Bal ance } } \\\hline & \text { Astst } & \text { Liability } & \text { Equity } & \text { Debit } & \text { Credit } \\\hline \text { A } & & & \text { X } & & \text { X } \\\hline \text { B } & & & & & \\\hline \text { C } & & & & & \\\hline \text { D } & & & & & \\\hline \text { E } & & & & & \\\hline \text { F } & & & & & \\\hline \text { G } & & & & & \\\hline \text { H } & & & & & \\\hline \text { I } & & & & & \\\hline \text { J } & & & & & \\\hline\end{array}$

Identify the account below that is classified as a liability in a company's chart of accounts:

A business uses a credit to record:

If cash was incorrectly debited for $100 instead of correctly crediting it for $100, the cash account's balance will be overstated (too high).

The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

Debit means increase and credit means decrease for all accounts.

A company's ledger is:

On December 3, the ABBJ Company paid $1,400 cash in salaries to office personnel. Prepare the general journal entry to record this transaction.

J. Brown Consulting immediately paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction. A) $\begin{array}{|l|r|r|}\hline \text { Prepaid Utilities } & 500 & \\\hline \text { Accounts Payable } & & 500 \\\hline\end{array}$ B) $\begin{array}{|l|r|r|}\hline \text { Utilities Expense } & 500 & \\\hline \text { Cash } & & 500 \\\hline\end{array}$ C) $\begin{array}{|l|r|r|}\hline \text { Cash } & 500 & \\\hline \text { Accounts Payable } & & 500 \\\hline\end{array}$ D) $\begin{array}{|l|r|r|}\hline \text { Utilities Expense } & 500 & \\\hline \text { Accounts Payable } & & 500 \\\hline\end{array}$ $\begin{array}{l}\text { E) }\\\begin{array} { | l | r | r | } \hline \text { Cash } & 500 & \\\hline \text { Utilities Expense } & & 500 \\\hline\end{array}\end{array}$

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction. A) $\begin{array}{|l|r|r|}\hline \text { Cash } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}$ B) $\begin{array}{|l|r|r|}\hline \text { Unearned Catering Revenue } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}$ C) $\begin{array}{|l|r|r|}\hline \text { Catering Revenue } & 1,000 & \\\hline \text { Accounts Receivable } & & 1,000 \\\hline\end{array}$ D) $\begin{array}{|l|r|r|}\hline \text { Accounts Receivable } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}$ $\begin{array}{l}\text { E) }\\\begin{array} { | l | r | r | } \hline \text { Accounts Receivable } & 1,000 & \\\hline \text { Unearned Catering Revenue } & & 1,000 \\\hline\end{array}\end{array}$