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Exam 16: Accounting for Business Transactions

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Question 101

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Identify the accounts that would normally have balances in the credit column of a business's trial balance

A) Liabilities and expenses.
B) Assets and revenues.
C) Revenues and expenses.
D) Revenues and liabilities.
E) Dividends and liabilities.

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

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Question 102

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The purchase of land and buildings will generally be recorded in the same ledger account.

A) True
B) False

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Question 103

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Preparation of a trial balance is the first step in processing a financial transaction.

Prepaid accounts (also called prepaid expenses) are generally:

Jose Consulting paid $500 cash for utilities for the current month. Determine the general journal entry that Jose Consulting will make to record this transaction.

Provided below is a list of definitions and terms. Match them by placing the letter that identifies the best definition

Increases in liability accounts are recorded as debits.

The right side of an account is called the debit side.

For each of the following accounts, identify whether a debit or credit yields the indicated change a. To increase Fees Earned b. To decrease Cash c. To decrease Unearned Revenue d. To increase Accounts Receivable e. To increase Common Stock f. To decrease Notes Payable g. To increase Prepaid Rent h. To increase Salaries Expense i. To increase Accounts Payable j. To decrease Prepaid Insurance

A general journal provides a place for recording all of the following except:

Unearned revenue is a liability that is settled in the future when a company delivers its products or services.

A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the ________.

A transaction that credits an asset account and credits a liability account must also affect one or more other accounts.

Jarrod Automotive, owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow:

NBC made a $2,500 payment on account, to satisfy a previously recorded account payable. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

What is a trial balance? What is its purpose?

What are the three groups of accounts shown on an unclassified balance sheet and define each group?

An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

The posting process is the link between the ________ and the ________.

Describe what source documents are and the purpose they serve in a business.