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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:


A) The Equipment account balance will be overstated.
B) The trial balance will not balance.
C) The error will overstate the debits listed in the journal.
D) The total debits in the trial balance will be larger than the total credits.
E) The error will overstate the credits listed in the journal.

F) B) and D)
G) A) and E)

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Credits always increase account balances.

A) True
B) False

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Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $40,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.


A)  Cash 40,000 Common Stock 40,000\begin{array}{|l|r|l|}\hline \text { Cash } & 40,000 & \\\hline \text { Common Stock } & & 40,000 \\\hline\end{array}
B)  Common Stock 40,000 Cash 40,000\begin{array}{|l|r|r|}\hline \text { Common Stock } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}
C)  Accounts Receivable 40,000 Cash 40,000\begin{array}{|l|r|l|}\hline \text { Accounts Receivable } & 40,000 & \\\hline \text { Cash } & & 40,000 \\\hline\end{array}
D)  Investments 40,000 Common Stock 40,000\begin{array}{|l|r|l|}\hline \text { Investments } & 40,000 & \\\hline \text { Common Stock } & & 40,000 \\\hline\end{array}
E)  Cash 40,000 Note Payable 40,000\begin{array}{|l|r|l|}\hline \text { Cash } & 40,000 & \\\hline \text { Note Payable } & & 40,000 \\\hline\end{array}

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

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When a company provides services for which cash will not be received until some future date, the company should record the amount billed as accounts receivable.

A) True
B) False

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Funky Music purchased $25,000 of equipment for cash. The asset account, Equipment, is ________ for $25,000 and the Cash account is ________ for $25,000.

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debited; credited
Ex...

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

A) True
B) False

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Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?


A)  Salaries Expense 300 Accounts Payable 300\begin{array}{|l|l|l|}\hline \text { Salaries Expense } & 300 & \\\hline \text { Accounts Payable } & & 300 \\\hline\end{array}
B)  Cash 300 Salaries Expense 300\begin{array}{|l|l|l|}\hline \text { Cash } & 300 & \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}
C)  Salaries Expense 300 Dividends 300\begin{array}{|l|l|l|}\hline \text { Salaries Expense } & 300 & \\\hline \text { Dividends } & & 300 \\\hline\end{array}
D)  Salaries Payable 300 Salaries Expense 300\begin{array}{|l|l|l|}\hline \text { Salaries Payable } & 300 & \\\hline \text { Salaries Expense } & & 300 \\\hline\end{array}
E)  Salaries Expense 300 Cash 300\begin{array}{|l|l|l|}\hline \text { Salaries Expense } & 300 & \\\hline \text { Cash } & & 300 \\\hline\end{array}

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

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If a company purchases equipment paying cash, the journal entry to record this transaction will include a debit to Cash.

A) True
B) False

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List the steps in processing transactions.

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Business transactions and events are the...

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Which of the following is NOT an equity account:


A) Unearned Revenue
B) Retained Earnings
C) Services Revenue
D) Wages Expense
E) Dividends

F) D) and E)
G) A) and B)

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A company provided $12,000 of consulting services and was immediately paid in cash by the customer. Identify the journal entry below that properly records this transaction.


A)  Accounts Receivable 12,000 Cash 12,000\begin{array}{|l|r|r|}\hline \text { Accounts Receivable } & 12,000 & \\\hline \text { Cash } & & 12,000 \\\hline\end{array}
B)  Cash 12,000 Consulting Services Revenue 12,000\begin{array}{|l|r|l|}\hline \text { Cash } & 12,000 & \\\hline \text { Consulting Services Revenue } & & 12,000 \\\hline\end{array}
C)  Consulting Services Revenue 12,000 Cash 12,000\begin{array}{|l|r|r|}\hline \text { Consulting Services Revenue } & 12,000 & \\\hline \text { Cash } & & 12,000 \\\hline\end{array}
D)  Accounts Payable 12,000 Consulting Services Revenue 12,000\begin{array}{|l|r|l|}\hline \text { Accounts Payable } & 12,000 & \\\hline \text { Consulting Services Revenue } & & 12,000 \\\hline\end{array}
E)  Accounts Receivable 12,000 Consulting Services Revenue 12,000\begin{array}{|l|r|l|}\hline \text { Accounts Receivable } & 12,000 & \\\hline \text { Consulting Services Revenue } & & 12,000 \\\hline\end{array}

F) D) and E)
G) A) and E)

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


A) Unearned revenue.
B) Prepaid expense.
C) Credit account.
D) Note payable.
E) Account receivable.

F) D) and E)
G) C) and E)

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Identify the statement below that is correct.


A) When a future expense is paid in advance, the payment is normally recorded in a liability account called Prepaid Expense.
B) Promises of future payment by the customer are called accounts receivable.
C) Increases and decreases in cash are always recorded in the common stock account.
D) An account called Land is commonly used to record increases and decreases in both the land and buildings owned by a business.
E) Accrued liabilities include accounts receivable.

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

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Business transactions and events are the starting points of financial statements.

A) True
B) False

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Compare the list of accounts below and choose the list that contains only accounts that would be classified as asset accounts on the Chart of Accounts.


A) Accounts Payable; Cash; Supplies.
B) Unearned Revenue; Accounts Payable; Dividends.
C) Building; Prepaid Insurance; Supplies Expense.
D) Cash; Prepaid Insurance; Equipment.
E) Notes Payable; Cash; Dividends.

F) A) and D)
G) D) and E)

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Identify the correct formula below used to calculate the debt ratio.


A) Total Equity/Total Liabilities.
B) Total Liabilities/Total Equity.
C) Total Liabilities/Total Assets.
D) Total Assets/Total Liabilities.
E) Total Equity/Total Assets.

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

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The financial statement that summarizes how equity changes over the reporting period is called the balance sheet.

A) True
B) False

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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.


A)  Unearned Catering Revenue 1,000 Catering Revenue 1,000\begin{array}{|l|l|l|}\hline \text { Unearned Catering Revenue } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}
B)  Catering Revenue 1,000 Accounts Receivable 1,000\begin{array}{|l|r|l|}\hline \text { Catering Revenue } & 1,000 & \\\hline \text { Accounts Receivable } & & 1,000 \\\hline\end{array}
C)  Accounts Receivable 1,000 Unearned Catering Revenue 1,000\begin{array}{|l|l|l|}\hline \text { Accounts Receivable } & 1,000 & \\\hline \text { Unearned Catering Revenue } & & 1,000 \\\hline\end{array}
D)  Accounts Receivable 1,000 Catering Revenue 1,000\begin{array}{|l|r|l|}\hline \text { Accounts Receivable } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}
E)  Accounts Payable 1,000 Catering Revenue 1,000\begin{array}{|l|l|l|}\hline \text { Accounts Payable } & 1,000 & \\\hline \text { Catering Revenue } & & 1,000 \\\hline\end{array}

F) D) and E)
G) B) and E)

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Asset accounts are decreased by debits.

A) True
B) False

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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?


A) $900.
B) $1,275.
C) $2,525.
D) $3,275.
E) $11,100.

F) B) and D)
G) A) and D)

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Showing 61 - 80 of 251

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