Question 1

J. Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.
A) $\begin{array} { | c | r | r | } 
\hline \text { Insurance Expense } & 2,500 & \
\hline \text { Cash } & & 2,500 \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 2,500 & \
\hline \text { Insurance Expense } & & 2,500 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 2,500 & \
\hline \text { Prepaid Insurance } & & 2,500 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Prepaid Insurance } & 2,500 & \
\hline \text { Cash } & & 2,500 \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Insurance Expense } & 2,500 & \
\hline \text { Prepaid Insurance } & & 2,500 \
\hline
\end{array}$

Accepted Answer

The payment is for a future insurance policy, so it should be recorded as a prepaid expense, which is an asset. The correct entry is to debit Prepaid Insurance and credit Cash.

Question 2

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?
A) Debit Assets $200,000; credit Common Stock, $200,000.
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000.
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000.
D) Debi Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000.
E) Debit Common Stock, $200,000; credit Assets, $200,000.

Accepted Answer

The transaction involves contributions of both cash and land, so they should be recorded separately. The cash should be debited for $70,000, the land should be debited for $130,000, and the common stock account should be credited for the total amount of $200,000. This entry properly records the contributions made by Richard Redden and establishes the basic accounting equation of Assets = Liabilities + Equity.

Question 3

An asset created by prepayment of an insurance expense is:
A) Recorded as a debit to Unearned Revenue.
B) Recorded as a debit to Prepaid Insurance.
C) Recorded as a credit to Unearned Revenue.
D) Recorded as a credit to Prepaid Insurance.
E) Not recorded in the accounting records until the insurance period expires.

Accepted Answer

When insurance is prepaid, it is recorded as an asset, specifically a Prepaid Insurance account. This account is a debit account as it represents an asset.

Question 4

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?
A) $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 1,500 & \
\hline \text { Accounts Receivable } & & 1,500 \
\hline
\end{array}$
B) $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 1,500 & \
\hline \text { Unearned Desigrn Revenue } & & 1,500 \
\hline
\end{array}$
C) $\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,500 & \
\hline \text { Unearned Design Revenue } & & 1,500 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 1,500 & \
\hline \text { Design Reverus } & & 1,500 \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & 1,500 & \
\hline \text { Cash } & & 1,500 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Cash and credit Accounts Receivable, as the payment is for a previously billed service, reducing the Accounts Receivable balance.

Question 5

J. Brown Consulting paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.
A) $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 500 & \
\hline \text { Cash } & & 500 \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 500 & \
\hline \text { Utilities Expense } & & 500 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Prepaid Utilities } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$

Accepted Answer

The correct journal entry involves debiting Utilities Expense to record the cost incurred and crediting Cash to reflect the payment made.

Question 6

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:
A) Dividends account.
B) Equity account.
C) Drawing account.
D) T-account.
E) Balance column sheet.

Accepted Answer

A T-account is a common tool used in accounting to represent ledger accounts. It is named after its shape, which resembles the letter "T". It provides a visual representation of how transactions affect an account's balance, with debits on the left and credits on the right.

Question 7

Select the account below that normally has a credit balance.
A) Cash.
B) Office Equipment.
C) Wages Payable.
D) Dividends.
E) Sales Salaries Expense.

Accepted Answer

Wages Payable is a liability account, which normally has a credit balance.

Question 8

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?
A) $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$
B) $\begin{array}{|c|r|r|}
\hline \text { Cash } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$

C) $\begin{array} { | c | r | r | } 
\hline \text { Utilities Expense } & 400 & \
\hline \text { Accounts Payable } & & 400 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Utilities Payable } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Utilities Expense and credit Accounts Payable, as the expense is incurred but not yet paid.

Question 9

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.
A) $\begin{array} { | c | c | c | } 
\hline \text { Unearned Catering Revenue } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$
B) $\begin{array} { | c | c | c | } 
\hline \text { Catering Revenue } & 1,000 & \
\hline \text { Accounts Receivable } & & 1,000 \
\hline
\end{array}$
C) $\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,000 & \
\hline \text { Unearned Catering Revenue } & & 1,000 \
\hline
\end{array}$
D) $\begin{array} { | c | c | c | } 
\hline \text { Accounts Receivable } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$
E) $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 1,000 & \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Accounts Receivable for $1,000 (to record the amount owed by the client) and credit Catering Revenue for $1,000 (to record the revenue earned).

Question 10

The company paid $100 cash in dividends to J. Smith, the owner. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?
A) $\begin{array} { | c | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Comrnen Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$
E) $\begin{array} { | c | c | c | } 
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$

Accepted Answer

The correct journal entry for paying dividends involves debiting the Dividends account and crediting the Cash account, reflecting the decrease in cash and the distribution of earnings.

Question 11

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a
A) Debit to Telephone Expense for $300.
B) Credit to Accounts Payable for $300.
C) Debit to Cash for $300.
D) Credit to Telephone Expense for $300.
E) Debit to Accounts Payable for $300.

Accepted Answer

The answer of Ralph Pine Consulting received its telephone bill...

Question 12

Jay's Limo Services, Inc. paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?
A) $\begin{array}{|c|c|c|}
\hline \text { Salaries Expense } & 300 & \
\hline \text { Accounts Payable } & & 300\
\hline
\end{array}$

B) $\begin{array}{|c|r|r|}
\hline \text { Cash } & 300 & \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$

C) $\begin{array} { | c | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Dividends } & & 300 \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Salaries Payable } & 300 & \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$
E) $\begin{array}{|c|r|r|}
\hline \text { Salaries Expense } & 300 & \
\hline \text { Cash } & & 300 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Salaries Expense to recognize the expense incurred and credit Cash to reflect the cash payment made.

Question 13

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:
A) Debit to Unearned Management Fees for $60,000.
B) Credit to Management Fees Earned for $60,000.
C) Credit to Cash for $60,000.
D) Credit to Unearned Management Fees for $60,000.
E) Debit to Management Fees Earned for $60,000.

Accepted Answer

When a client pre-pays for services, the company receiving the payment must record it as a liability until the services are actually rendered. In this case, Golddigger Services would record the transaction by crediting the liability account Unearned Management Fees for $60,000 and debiting Cash for $60,000. Option D is the only choice that reflects this accounting treatment. Option A is incorrect because it debits Unearned Management Fees instead of crediting it. Option B is incorrect because Management Fees Earned should only be credited once the services have actually been performed. Option C is incorrect because it only reflects the cash received, but not the liability created. Option E is incorrect because Management Fees Earned is an income account, not a liability account.

Question 14

An account balance is:
A) The total of the credit side of the account.
B) The total of the debit side of the account.
C) The difference between the total debits and total credits for an account including the beginning balance.
D) Assets = liabilities + equity.
E) Always a credit.

Accepted Answer

An account balance is the difference between total debits and total credits for an account including the beginning balance. This is known as the account's net balance or simply the balance. Option A, B, and E are incorrect because the account balance takes into account both credits and debits, and can be either a credit or a debit balance. Option D is incorrect because it is the basic accounting equation that represents the relationship between assets, liabilities, and equity, and not directly related to account balances.

Question 15

Identify the statement below that is correct?
A) The left side of a T-account is the credit side.
B) Debits decrease asset and expense accounts, and increase liability, equity, and revenue accounts.
C) The left side of a T-account is the debit side.
D) Credits increase asset and expense accounts, and decrease liability, equity, and revenue accounts.
E) In certain circumstances the total amount debited need not equal the total amount credited for a particular transaction.

Accepted Answer

The left side of a T-account is always the debit side. Option A is incorrect because the left side is debit, not credit. Option B is incorrect because debits increase asset accounts and expenses and decrease liability, equity, and revenue accounts. Option D is incorrect because credits increase liability, equity, and revenue accounts and decrease asset and expense accounts. Option E is incorrect because the total debited amount must always equal the total credited amount according to the double-entry accounting principle.

Question 16

A double-entry accounting system is an accounting system:
A) That records each transaction twice.
B) That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C) In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D) That may only be used if T-accounts are used.
E) That insures that errors never occur.

Accepted Answer

A double-entry accounting system records the effects of transactions in at least two accounts with equal debits and credits. This system ensures accuracy and helps to prevent errors. It is not necessary to use T-accounts in a double-entry system, and it is possible to have multiple debits or credits in a transaction.

Question 17

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.
A) $\begin{array} { | c | r | r | } 
\hline \text { Unearned Catering Revenue } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$
B) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Accounts Receivable } & & \mathbf { 8 0 0 } \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Unearned Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$
D) $\begin{array} { | c | r | r | } 
\hline \text { Cash } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Accounts Receivable } & \mathbf { 8 0 0 } & \
\hline \text { Catering Revenue } & & \mathbf { 8 0 0 } \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Cash for $800 and credit Unearned Catering Revenue for $800, as the cash received is for services to be provided in the future, creating a liability.

Question 18

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?
A) $\begin{array} { | c | r | r | } 
\hline \text { Accounts Payable } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$
C) $\begin{array} { | c | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Cash } & & 7,000 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$
E) $\begin{array} { | c | r | r | } 
\hline \text { Supplies Experise } & 7,000 & \
\hline \text { Accounts Payable } & & 7,000 \
\hline
\end{array}$

Accepted Answer

Wiley Consulting purchased supplies, which increases the Supplies account (debit) and decreases the Cash account (credit) since they paid cash immediately.

Question 19

A debit is used to record which of the following:
A) A decrease in an asset account.
B) A decrease in an expense account.
C) An increase in a revenue account.
D) An increase in a contributed capital account.
E) An increase in the dividends account.

Accepted Answer

The answer of A debit is used to record which...

Question 20

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:
A) Debit to Accounts Payable.
B) Debit to Accounts Receivable.
C) Credit to Cash.
D) Credit to Accounts Payable.
E) Credit to Common Stock.

Accepted Answer

Willow Rentals purchased office supplies on credit, meaning they owe money to the supplier. To record this transaction in the general journal, a credit to Accounts Payable should be made to show the increase in the amount owed. Therefore, the correct answer is D, a credit to Accounts Payable.

Quiz 2: Analyzing for Business Transactions

J. Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

Richard Redden contributed $70,000 in cash and land worth $130,000 to open a new business, RR Consulting, Inc. Which of the following general journal entries will RR Consulting, Inc. make to record this transaction?

An asset created by prepayment of an insurance expense is:

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

J. Brown Consulting paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

Select the account below that normally has a credit balance.

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

The company paid $100 cash in dividends to J. Smith, the owner. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a

Jay's Limo Services, Inc. paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services, Inc. make to record this transaction?

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

An account balance is:

Identify the statement below that is correct?

A double-entry accounting system is an accounting system:

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record this transaction.

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction?

A debit is used to record which of the following:

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a: