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Exam 2: Accounting for Business Transactions

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Question 1

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List the four steps in recording transactions.

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1.Identify transactions and so...

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

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What are the three groups of accounts shown on an unclassified balance sheet and define each group?

At the beginning of the current year,Snell Co.total assets were $248,000 and its total liabilities were $174,200.During the year,the company reported total revenues of $93,000,total expenses of $76,000 and dividends of $5,000.There were no other changes in equity during the year and total assets at the end of the year were $260,000.The company's debt ratio at the end of the current year is:

A ________ is a list of all the accounts used by a company and their identification codes but does not contain the balances.

Andrea Apple opened Apple Photography on January 1 of the current year.During January,the following transactions occurred and were recorded in the company's books: 1.Andrea invested $13,500 cash in the business in exchange for common stock. 2.Andrea contributed $20,000 of photography equipment to the business. 3.The company paid $2,100 cash for an insurance policy covering the next 24 months. 4.The company received $5,700 cash for services provided during January. 5.The company purchased $6,200 of office equipment on credit. 6.The company provided $2,750 of services to customers on account. 7.The company paid cash of $1,500 for monthly rent. 8.The company paid $3,100 on the office equipment purchased in transaction #5 above. 9.Paid $275 cash for January utilities. -Based on this information,the balance in the cash account at the end of January would be:

Items such as sales receipts,bank statements,checks,and purchase orders are examples of a business's source documents.

Smart Consulting,paid cash dividends of $2,000 to its common stockholders.Identify the general journal entry below that Smart Consulting will make to record the transaction.

Cash dividends paid to stockholders are not reported on the income statement.

A column in journals and ledger accounts that is used to cross reference journal and ledger entries is the:

The following transactions occurred during July: 1.Received $900 cash for services provided to a customer during July. 2.Issued common stock for $2,200 cash. 3.Received $750 from a customer in partial payment of his account receivable which arose from sales in June. 4.Provided services to a customer on credit,$375. 5.Borrowed $6,000 from the bank by signing a promissory note. 6.Received $1,250 cash from a customer for services to be performed next year. What was the amount of revenue for July?

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

An account is a record of increases and decreases in a specific asset,liability,equity,revenue,or expense item.

Credits always increase account balances.

Langley has a debt ratio of 0.3 and its competitor,Appleton,has a debt ratio equal to 0.7.Determine the statement below that is correct.

Gloria Catering provided $1,000 of catering services and billed its client for the amount owed.Determine the general journal entry that Gloria Catering will make to record this transaction.

Source documents identify and describe transactions and events entering the accounting process.

Geoff Parker,the sole stockholder of Parker Tax Services,started the business by investing $10,000 cash and a building worth $20,000.Identify the general journal entry below that Parker Tax Services will make to record the transaction.

Marco Nelson opened a frame shop and completed these transactions: 1.Marco started the shop by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock. 2.Purchased $70 of office supplies on credit. 3.Paid $1,200 cash for the receptionist's salary. 4.Sold a custom frame service and collected $1,500 cash on the sale. 5.Completed framing services and billed the client $200. What was the balance of the cash account after these transactions were posted?

Dividends are subtracted on the income statement as a business expense.