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Exam 15: Analyzing for Business Transactions

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Question 31

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For each of the accounts in the following table (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. $\begin{array} { | l | l | l | } \hline & \text { Account Type } & \text { Normal Balance } \\\hline \text { a. Wages Expense } & & \\\hline \text { b. Accounts Receivable } & & \\\hline \text { c. CommissionsEarned } & & \\\hline \text { d. Salaries Payable } & & \\\hline \text { f. Common Stock } & & \\\hline \text { g. Salaries Expense } & & \\\hline \text { h. Magazine Subscription Revenue } & & \\\hline \text { Dividends } & & \\\hline\end{array}$

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\[\begin{array} { | l | l | l | }
\hlin...

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Question 32

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The second step in the analyzing and recording process is to record the transactions and events in the book of original entry, called the ________.

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Question 33

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Given each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error. a. $100 debit to Cash was debited to the Cash account twice. b. $1,900 credit to Sales was posted as a $190 credit. c. $5,000 debit to Office Equipment was debited to Office Supplies. d. $625 debit to Prepaid Insurance was posted as a $62.50 debit. e. $520 credit to Accounts Payable was not posted. Amount Out Column Having Error of Balance Larger Total a. ________ ________ b. ________ ________ c. ________ ________ d. ________ ________ e. ________ ________

You increase the Service Revenue account on the ________side of its account.

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

Jerry's Butcher Shop had the following assets and liabilities at the beginning and end of the current year: Assets Liabilities Beginning of the year $114,000 $68,000 End of the year 135,000 73,000 If stockholders invested an additional $12,000 in the business in exchange for common stock and $5,000 of dividends were paid during the year, what was the amount of net income earned by Jerry's Butcher Shop?

Unearned revenues are generally:

What is a trial balance? What is its purpose?

The purchase of land and buildings will generally be recorded in the same ledger account.

Unearned revenue is classified as a(an) ________ on a business's balance sheet.

The right side of an account is called the debit side.

If a company is highly leveraged, this means that it has relatively high risk of not being able to repay its debt.

While in the process of posting from the journal to the ledger, a company failed to post a $500 debit to the Equipment account. The effect of this error will be that:

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

For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. $\begin{array} { | l | l | l | } \hline \text { Account Title } & \text { Account Type } & \begin{array} { l } \text { Normal Balance } \\\text { (Debit or Credit) }\end{array} \\\hline \text { a. Prepaid Insurance } & & \\\hline \text { b. Accounts Payable } & & \\\hline \text { c. Common Stock } & & \\\hline \text { d. Utilities Expense } & & \\\hline \text { e. Land } & & \\\hline \text { f. Services Revenue } & & \\\hline \text { g. Notes Receivable } & & \\\hline \text { h. Advertising Expense } & & \\\hline \text {i. Unearned Revenue } & & \\\hline\text { j. Service Revenue }&&\\\hline\end{array}$

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

Joel Consulting received $3,000 from a customer for services provided. Joel's general journal entry to record this transaction will be:

The balances for the accounts of Milo's Management Co. for the year ended December 31 are shown below. Each account shown had a normal balance. $\begin{array}{l}\begin{array}{|l|l|}\hline \text { Accounts Payable } \ldots \ldots & \$ 6,500 \\\hline \text { Accounts Receivable... } & 7,000 \\\hline \text { Cash } \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots&?\\\hline \text { Office Supplies. } & 1,200 \\\hline \text { Building } & 125,000 \\\hline \text { Supplies Expense ............ } & 21,500 \\\hline \text { Common Stock..... } & 118,700 \\\hline \text { Management Revenue. } & 175,000\\\hline\end{array}\begin{array}{|l|l|}\hline \text { Wages Expense ....... } & 36,000 \\\hline \text { Rent Expense ..... } & 6,000 \\\hline\\\hline\\\hline\\\hline \text { Land . } & 50,000 \\\hline \text { Unearned Management Fee, } & 4,000 \\\hline \text { Dividends } & 48,000\\\hline\end{array}\end{array}$

A company's ledger is:

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a: