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Exam 2: Accounting for Business Transactions

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Question 91

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For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account. Account

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Question 92

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If insurance coverage for the next two years is paid for in advance, the amount of the payment is debited to an asset account called Prepaid Insurance.

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Question 93

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The heading on every financial statement lists the three W's-Who (the name of the business); What (the name of the statement); and Where (the organization's address).

Gi Gi's Dance Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. The client paid immediately. Identify the general journal entry below that Gi Gi's will make to record the transaction.

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

The credit purchase of a new oven for $4,700 was posted to Kitchen Equipment as a $4,700 debit and to Accounts Payable as a $4,700 debit. What effect would this error have on the trial balance?

Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea, the stockholder, invested $13,500 cash in the business. 2) Andrea contributed $20,000 of photography equipment to the business. 3) The company paid $2,100 cash for an insurance policy covering the next 24 months. 4) The company received $5,700 cash for services provided during January. 5) The company purchased $6,200 of office equipment on credit. 6) The company provided $2,750 of services to customers on account. 7) The company paid cash of $1,500 for monthly rent. 8) The company paid $3,100 on the office equipment purchased in transaction #5 above. 9) Paid $275 cash for January utilities. Based on this information, the balance in the stockholders' equity reported on the Balance Sheet at the end of the month would be:

Joel Consulting received $3,000 from a customer for services provided. Joel's general journal entry to record this transaction will be:

The ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then common stock and dividends, followed by revenues and expenses.

The _____________________ is found by determining the difference between total debits and total credits for an account, including any beginning balance.

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

Posting is the transfer of journal entry information to the ledger.

Revenues and expenses are two categories of ____________________ accounts.

Indicate whether a debit or credit entry would be required to record the following changes in each account. a. To decrease Cash. b. To increase Common Stock. c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Dividends.

Miley Block, Inc. is a building consultant. Shown below are (a) several accounts in her ledger with each account preceded by an identification number, and (b) several transactions completed by Block. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction. $\begin{array} { | l | l | l | l| } \hline \text { 1. } & \text { Accounts Payable } & 7 . & \text { Telephone Expense } \\\hline \text { 2. } & \text { Accounts Receivable } & 8 & \text { Unearned Revenue } \\\hline \text { 3. } & \text { Cash } & 9 . & \text { Common Stodk } \\\hline \text { 4. } & \text { Consulting Fees Earned } & 10 . & \text { Dividends } \\\hline \text { 5. } & \text { Office Supplies } & 11 . & \text { Insurance Expense } \\\hline 6 . & \text { Office Supplies Expense } & 12 . & \text { Prepaid Insurance } \\\hline\end{array}$ $\begin{array} { | l | l | c | c| } \hline & & \text { Debit } & \text { Credit } \\\hline & \text { Example: } & & \\\hline & \text { Completed consulting work for a client who will pay at a later date } & 2 & 4 \\\hline \text { A. } & \text { Received cash in advance from a customer for designing a building } & & \\\hline \text { B. } & \text { Purchased office supplies on credit } & & \\\hline \text { C. } & \text { Paid for the supplies purflased in B } & & \\\hline \text { D. } & \text { Received the telephone bill of the business and immediately paid it } & & \\\hline \text { E. } & \text { Paid for a 3-year insurance policy } & & \\\hline\end{array}$

A credit is used to record an increase in all of the following accounts except:

All of the following statements regarding a sales invoice are true except:

A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?

A report that lists a business's accounts and their balances, in which the total debit balances should equal the total credit balances, is called a(n) :

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.