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Exam 2: The Recording Process

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Question 61

Multiple Choice

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A numbering system for a chart of accounts

A) is prescribed by GAAP.
B) is uniform for all businesses.
C) usually starts with income statement accounts.
D) usually starts with balance sheet accounts.

E) B) and C)
F) A) and D)

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Question 62

Multiple Choice

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If a company has received a payment from a customer, then

A) its cash account will be debited.
B) its cash account will be credited.
C) the cash account debits will exceed the cash account credits.
D) accounts receivable would be debited

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

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Question 63

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Matt Dudeck has operated a lawn care business for 3 months. The following transactions occurred in the fourth month: 1. Matt decides that the business needs a new vehicle. A truck is purchased for $20,000 and financed by a note payable for the full amount. 2. Matt invested $5,000 of his own funds in the business. 3. Invoices to customers were issued for services completed. The total invoices amount to $4,500. 4. Paid $350 on account for supplies purchased the prior month. 5. Collected $3,750 from customers for work completed and invoiced the prior month. 6. Paid wages of $250 to an assistant. 7. Received $300 deposit from a new customer for whom work will not be performed until next month. For each transaction, complete the information on the following table:

The procedure of transferring journal entries to the ledger accounts is called

To increase a liability account, the account is

A trial balance is a listing of

Transactions are recorded in alphabetical order in a journal.

In recording business transactions, evidence that an accounting transaction has taken place is obtained from

A chart of accounts is

Identify the account to be debited and the account to be credited for each of the following transactions: 1. Purchased equipment for cash and a note payable. 2. Accepted a cash deposit from a customer for a service to be provided next month. 3. Provided services on account. 4. Purchased supplies on account 5. Received payment form the client in 3. 6. Provided services to customer in 2 and collected cash for the remaining work done. 7. Owner paid himself. 8. Paid in full for equipment purchased in 1.

For each transaction given, enter in the tabulation given below a "D" for debit and a "C" for credit to reflect the increases and decreases of the assets, liabilities, and owner's equity accounts. In some cases there may be a "D" and a "C" in the same column. If there is not a transaction which needs to be recorded, leave the column blank. Transactions: 1. Owner invests cash in the business. 2. Pays insurance in advance for six months. 3. Hires new administrative assistant. 4. Purchases office supplies on account. 5. Pays electricity bill. 6. Borrows money from local bank. 7. Makes payment on account. 8. Receives cash from customers on account. 9. Provides services to customers on account. 10. Owner withdraws assets from the business.

The drawings account is a subdivision of the owner's capital account and appears as an expense on the income statement.

The normal balance of any account is the

A list of accounts and their balances at a given time is called

The normal balance for the cash account is a credit.

On June 1, 2014, Joanne White buys a copier machine for her business and finances this purchase with cash and a note. When journalizing this transaction, she will

Which of the following is NOT true about an asset?

A company pays $5,000 to its creditor. This would

In recording an accounting transaction in a double-entry system

Which of the following statements about errors or irregularities is INCORRECT?