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Exam 2: Analyzing Transactions

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Question 31

True/False

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Revenues are equal to the difference between cash receipts and cash payments.

A) True
B) False

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Question 32

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Which of the following is not true with a double-entry accounting system?

A) The accounting equation remains in balance.
B) The sum of all debits is always equal to the sum of all credits in each journal entry.
C) Each business transaction will have two debits.
D) Every transaction affects at least two accounts.

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

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Question 33

True/False

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Revenue accounts are increased by credits.

When an account payable is paid with cash, the stockholders' equity in the business decreases.

Which of the following accounts is a stockholders' equity account?

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Balance incorrectly computed.

Match each of the following accounts with its proper account group from groups listed below. -Prepaid Insurance

The purchase of supplies on account was recorded and posted as a debit to Supplies for $500 and a credit to Accounts Receivable for $500. The correcting entry would include a:

The payment for the monthly rent will require which of the following entries?

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.

On August 30, JumpStart incurred the following expenses: Payment to the landlord for August rent, $2,300 Payment to the Gas & Electric Company for August's bill, $525 Payment of employee wages for the last half of August, $1,750 Payment of shopping center's parking lot cleaning fee, $275 Journalize these payments as one compound journal entry.

Transactions are listed in the journal chronologically.

The process of transferring the data from the journal to the ledger accounts is called posting.

Journalize the following five transactions for Nexium & Associates, Inc. Omit explanations. March 1 Bills are sent to clients for services provided in February in the amount of $800. 9 Corner Office, Inc. delivers office furniture $1,060) and office supplies $160) to Nexium, leaving an invoice for $1,220. 15 Payment is made to Corner Office, Inc. for the furniture and office supplies delivered on March 9. 23 A bill for $430 for electricity for the month of March is received and will be paid on its due date in April. 31 Salaries of $850 are paid to employees.

Which of the following is not a correct rule of debits and credits?

On December 1, JumpStart Company provides $2,800 in services to clients. a) Journalize this event as if the clients had paid cash at the time the services were rendered. b)1) Journalize this event as if the clients had placed this on account. b)2) Assume that the clients paid $1,200 of the amount on account on December 30. Journalize this transaction.

Which of the following describes the classification and normal balance of the fees earned account?

A chart of accounts is

Liability accounts are increased by debits.

The process of recording a transaction in the journal is called journalizing.