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Exam 2: Accounting for Transactions

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Question 71

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The higher the debt ratio, the higher risk of a company not being able to meet its obligations.

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Question 72

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In which of the following situations would the trial balance not balance?

A) A $1,000 collection of an account receivable was erroneously posted as a debit to Accounts Receivable and a credit to Cash.
B) The purchase of office supplies on account for $3,250 was erroneously recorded in the journal as $2,350 debit to Office Supplies and credit to Accounts Payable.
C) A $50 cash receipt for the performance of a service was not recorded at all.
D) The purchase of office equipment for $1,200 was posted as a debit to Office Supplies and a credit to Cash for $1,200.
E) The cash payment of a $750 account payable was posted as a debit to Accounts Payable and a debit to Cash for $750.

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Question 73

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Which financial statements are prepared for a period of time?

A written promise to pay a definite sum of money on a specific future date is a(n) :

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

Prepaid expenses are:

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

Stride Rite had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

The trial balance can serve as a replacement for the balance sheet, since debits must balance with credits.

As prepaid expenses are used up, the costs of these assets become expenses.

A _______________ is a list of all the accounts used by a company and their identification codes.

The following transactions occurred during July: A.Received $900 cash for services provided to a customer during July. B. Received $2,200 cash investment from Barbara Hanson, the owner of the business. C. Received $750 from a customer in partial payment of his account receivable, which arose from sales in June. D. Provided services to a customer on credit, $375. E. Signed a promissory note for a $6,000 bank loan. F. Received $1,250 cash from a customer for services to be rendered next year. What was the amount of revenue for July?

FastForward purchased $25,000 of equipment for cash. The Equipment asset account is _______________ for $25,000 and the cash account is _______________ for $25,000.

Which of the following accounts is a balance sheet account?

List the steps in processing transactions.

A $15 credit to Sales was posted as a $150 credit. By what amount is Sales in error?

Flora Accounting Services completed these transactions in February: a. Purchased office supplies on account, $300. b. Completed work for a client on credit, $500. c. Paid cash for the office supplies purchased in (a). d. Completed work for a client and received $800 cash. e. Received $500 cash for the work described in (b). f. Received $1,000 from a client for accounting services to be performed in March. Prepare journal entries to record the above transactions. Explanations are not necessary.

The balance sheet provides a link between beginning and ending income statements.

A company had the following account balances at year-end: Cash……………………………………… $30,000 Accounts receivable……………………… 32,000 Accounts payable………………………… 20,000 Fees earned…………………………………..65,000 Rent expense…………………………………15,000 Insurance expense……………………………..4,800 Supplies………………………………………..5,000 Common stock………………………………. 5,000 Retained earnings………………………….....14,800 Dividends………………………………… 18,000 If all of the accounts have normal balances, what are the total debits on the trial balance?

High financial leverage is always bad for a company's owners.