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Exam 2: Analyzing Transactions

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Question 61

Multiple Choice

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For each of the following accounts, indicate whether its normal balance is on the credit side or the debit side of the T account. -Interest Earned

A) Credit side
B) Debit side

C) A) and B)
D) undefined

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Question 62

Multiple Choice

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The chart of accounts is designed to

A) alphabetize the accounts to make reading easier for financial statement users
B) organize accounts in order of dollar amount to simplify the accounting information for users
C) summarize the transactions and determine ending account balances
D) meet the information needs of a company's managers and other users of its financial statements

E) All of the above
F) A) and C)

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Question 63

Multiple Choice

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A debit balance in which of the following accounts would likely indicate an error?

The chart of accounts should be the same for each business.

Answer the following questions for each of the errors listed below, considered individually: (a)Did the error cause the trial balance totals to be unequal? (b)What is the amount of the difference between the trial balance totals (where applicable)? (c)Which of the trial balance totals, debit or credit, is the larger (where applicable)?​Present your answers in columnar form, using the following headings:Errors: (1)A withdrawal of $3,000 cash by the owner was recorded by a debit of $3,000 to Salary Expense and a credit of $3,000 to Cash. (2)A $650 purchase of supplies on account was recorded as a debit of $1,650 to Equipment and a credit of $1,650 to Accounts Payable. (3)A purchase of equipment for $3,450 on account was not recorded. (4)An $870 receipt on account was recorded as an $870 debit to Cash and a $780 credit to Accounts Receivable. (5)A payment of $1,530 cash on account was recorded only as a credit to Cash. (6)Cash sales of $8,500 were recorded as a credit of $8,500 to Cash and a credit of $8,500 to Fees Earned. (7)The debit to record a $4,000 cash receipt on account was posted twice; the credit was posted once. (8)The credit to record a $300 cash payment on account was posted twice; the debit was posted once. (9)The debit balance of $7,400 in Accounts Receivable was recorded in the trial balance as a debit of $7,200.

Assume that you are creating a chart of accounts for a company. Each account number will have two digits. The first digit indicates the major account group to which the account belongs. Which of the following correctly identifies the major account groups typically represented by the numbers 1 through 5?

The process of recording a transaction in the journal is called journalizing.

Prepare a trial balance, listing the following accounts in proper sequence. The accounts (all normal balances) were taken from the ledger of Sophie Designs Co. on April 30.

Match each of the following accounts with its proper account group from the groups listed below. ​ -Chris Clark, Drawing

The balance of an account is determined by

Transactions are initially entered into a record called a journal.

Journalize the entries to correct the following errors: (a)A purchase of supplies for $500 on account was recorded and posted as a debit to Supplies for $200 and as a credit to Accounts Receivable for $200. (b)A receipt of $2,500 from Fees Earned was recorded and posted as a debit to Fees Earned for $2,500 and a credit to Cash for $2,500.

Journalizing a transaction with both the debit and the credit for $69 instead of $96 will cause the trial balance to be out of balance.

On June 1, the cash account balance was $96,750. During June, cash receipts totaled $305,000 and the June 30 balance was $75,880. Determine the cash payments made during June.

That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified through a (n)

On November 10, JumpStart provides $2,900 in services to clients. At the time of service, the clients paid $600 in cash and put the balance on account. (a) Journalize this event.​ (b) On November 20, JumpStart's clients paid an additional $900 on their accounts due. Journalize this event.​ (c) Calculate the accounts receivable balance on November 30.

Which of the following types of accounts have a normal credit balance?

The accounts in the ledger of Monroe Entertainment Co. are listed below. All accounts have normal balances.?? $\begin{array} { l r l r } \text { Accounts Payable } & \$ 1,500 & \text { Fees Earned } & \$ 3,600 \\\text { Accounts Receivable } & 1,800 & \text { Insurance Expense } & 1,300 \\\text { Prepaid Insurance } & 2,000 & \text { Land } & 3,000 \\\text { Cash } & 3,200 & \text { Wages Expense } & 1,400 \\\text { Drawing } & 1,200 & \text { Capital } & 8,800\end{array}$ Total assets are

Exhibit 2-1 All nine transactions for Ralston Sports Co. for September, the first month of operations, are recorded in the following T accounts: -Refer to Exhibit 2-1. Prepare a trial balance, listing the accounts in their proper order.

The process of recording a transaction in the journal is called