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Exam 2: Accounting System and Financial Statements

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Question 101

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During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?

A) $83,900.
B) $91,900.
C) $6,600.
D) $75,900.
E) $4,900.

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

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Question 102

Multiple Choice

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The record of all accounts and their balances used by a business is called a:

A) Journal.
B) Book of original entry.
C) General Journal.
D) Balance column journal.
E) Ledger.

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

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Question 103

Multiple Choice

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Golddigger Services, Inc. provides services to clients. On May 1, Golddigger Services collected $60,000 from a client for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Increases in liability accounts are recorded as debits.

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

Identify the statement below that is correct.

A record containing all the separate accounts for a company as well as all of their balances is called the ___________________.

The business paid $100 cash dividend to Charles Nice (the sole stockholder of the corporation). Set up the necessary T-accounts below by entering appropriate account names, and show how this transaction would be recorded directly in those accounts.

Pippa's Paralegal Services, Inc. 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 from a client for paralegal services to be performed in March. Prepare journal entries to record the above transactions. Explanations are not necessary.

Jackson Brown Footwear had total liabilities of $130 million and total assets of $375 million. Its debt ratio was _______________.

George Butler owned a tugboat and was tired of his current job. He decided to open a business, Butler, Inc., that provides day tugboat tours to tourists along the Mississippi River near his hometown. Prepare journal entries to record the following transactions.

The first step to get from transactions and events to financial statements is to identify each transaction from source documents.

Explain the difference between a general ledger and a chart of accounts.

Bologna Lodging, Inc. had the following accounts and balances, shown in random rather than chart of accounts order, as of December 31: Using the information in the table, calculate the total assets reported on Bologna's balance sheet for the period.

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

The balances for the accounts of Milo's Management Co., Inc. for the year ended December 31 are shown below. Each account shown had a normal balance. Calculate the correct balance for Cash and prepare a trial balance.

Source documents identify and describe business transactions and are the basis for accounting entries.

The balance column in a ledger account is:

A general journal is:

A _______________ is a list of all the accounts used by a company and their identification codes but does not contain the balances.