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Exam 3: The Accounting Information System

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Question 81

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The primary purpose of the trial balance is to

A) disclose the complete effect of a transaction in one place.
B) make sure a journal entry is not posted twice.
C) transfer journal entries to the ledger accounts.
D) prove the equality of the debit and credit amounts after posting.

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Question 82

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A student is considering dropping his accounting class because he cannot understand the rules of debits and credits. Can the student be successful in the course without an understanding of the rules of debits and credits? Explain the rules of debits and credits in a way that will help him understand them.

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Accounting is based on the double-entry ...

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Question 83

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Selected accounts from the ledger of McDaniel Corporation appear below. For each account, indicate the following: (a) In the first column at the right, indicate the nature of each account, using the following abbreviations: Asset - A Liability - L None of the above - N Expense - E Revenues - R (b) In the second column, indicate the normal balance by inserting Dr. or Cr.

A two column list of all accounts and their balances at a given time is a ______________.

Which of the following is an asset?

During February 2014, its first month of operations, the owner of Schwenn Enterprises invested cash of $40,000. Schwenn had cash sales of $8,000 and paid expenses of $14,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

A revenue account

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

A complete journal entry does not show

Salaries and wages payable is a type of expense.

If a company buys a $700 machine on credit, this transaction will affect the

The Unearned Service Revenue account is classified as a(n)

A debit is not the normal balance for which account listed below?

During 2014, its first year of operations, Jane's Bakery had revenues of $65,000 and expenses of $33,000. The business paid cash dividends of $18,000. What is the balance in Retained Earnings at December 31, 2014?

Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions. 1. Stockholders invest $40,000 in cash in starting a real estate office operating as a corporation. 2. Purchased $500 of supplies on credit. 3. Purchased equipment for $25,000, paying $3,500 in cash and signed a 30-day, $21,500, note payable. 4. Real estate commissions billed to clients amount to $4,000. 5. Paid $700 in cash for the current month's rent. 6. Paid $250 cash on account for office supplies purchased in transaction 2. 7. Received a bill for $800 for advertising for the current month. 8. Paid $2,500 cash for office salaries. 9. Paid $1,200 cash dividends to stockholders. 10. Received a check for $2,000 from a client in payment on account for commissions billed in transaction 4.

Collection of a $600 Accounts Receivable

Why is the Dividends account increased by a debit? Explain in terms of its relationship to stockholders' equity.

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

A tabular analysis of the transactions made during August 2014 by Baxter Company during its first month of operations is shown below. Each increase and decrease in stockholders' equity is explained. Instructions (a) Determine how much stockholders' equity increased for the month. (b) Compute the net income for the month.

Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?