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Exam 2: Accounting for Business Transactions

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Question 81

Multiple Choice

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The debt ratio of Braun is 0.9 and the debt ratio of Kemp is 1.0.Based on this information,an investor can conclude:

A) Kemp finances a relatively lower portion of its assets with liabilities than Braun.
B) Kemp has less financial leverage.
C) Braun has higher financial leverage.
D) Kemp has the exact same dollar amount of total liabilities and total assets.
E) Braun has less equity per dollar of assets than Kemp.

F) A) and E)
G) B) and C)

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Question 82

Multiple Choice

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The right side of a T-account is a(n) :

A) Debit.
B) Increase.
C) Credit.
D) Decrease.
E) Account balance.

F) B) and D)
G) All of the above

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Question 83

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Sarah's Paralegal 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 in advance from a client for services to be performed in March. Prepare journal entries to record the above transactions.Explanations are not necessary.

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

Identify the statement below that is correct.

Wiley Hill opened Hill's Repairs on March 1 of the current year.During March,the following transactions occurred: 1.Wiley invested $25,000 cash in the business in exchange for common stock. 2.Wiley contributed $100,000 of equipment to the business in exchange for common stock. 3.The company paid $2,000 cash to rent office space for the month of March. 4.The company received $16,000 cash for repair services provided during March. 5.The company paid $6,200 for salaries for the month of March. 6.The company provided $3,000 of services to customers on account. 7.The company paid cash of $500 for utilities for the month of March. 8.The company received $3,100 cash in advance from a customer for repair services to be provided in April. 9.The company paid $5,000 in cash dividends. Based on this information,the total amount of stockholders' equity reported on the balance sheet at the end of March would be:

Preparation of a trial balance is the first step in processing a financial transaction.

A company had total assets of $350,000,total liabilities of $101,500,and total equity of $248,500.Calculate the company's debt ratio.

Asset accounts are decreased by debits.

If the Common stock account had a $10,000 credit balance at the beginning of the period,and during the period,an additional $5,000 of common stock is issued,the balance in the common stock account listed on the trial balance will be equal to a debit balance of $5,000.

Expenses always decrease equity.

The balance column in a ledger account is:

If Tyrol Willow,the sole stockholder of Willow Hardware,withdraws cash of the business to purchase a family car,the business should record this use of cash with an entry to:

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

The amount of net income is added on the statement of retained earnings.

A company's written promise to pay (in the form of a promissory note) a future amount is a(n) :

A company's list of accounts and the identification numbers assigned to each account is called a:

The third step in the analyzing and recording process is to record each transaction chronologically in a________.

Asset accounts normally have debit balances and revenue accounts normally have credit balances.

A law firm collected $1,800 on account for work performed in the previous month.Which of the following general journal entries will the firm make to record this collection of cash?