Question 1

A business's general journal provides a place for recording all of the following except:
A) The transaction date.
B) The names of the accounts involved.
C) The amount of each debit and credit.
D) An explanation of the transaction.
E) The balance in each account.

Accepted Answer

The general journal does not provide the balance in each account. It only records the information related to the transaction date, accounts involved, and the amount of each debit and credit along with an explanation of the transaction.

Question 2

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):
A) Account balance.
B) Trial balance.
C) Ledger.
D) Chart of accounts.
E) General Journal.

Accepted Answer

A trial balance is specifically designed to ensure that the total debits equal the total credits in a company's accounts. The other options, while related to accounting, do not necessarily have this function.

Question 3

A general journal is:
A) A ledger in which amounts are posted from a balance column account.
B) Not required if T-accounts are used.
C) A complete record of all transactions in chronological order from which transaction amounts are posted to the ledger accounts.
D) Not necessary in electronic accounting systems.
E) A book of final entry because financial statements are prepared from it.

Accepted Answer

A general journal is a complete record of all transactions in chronological order from which transaction amounts are posted to the ledger accounts. This is different from a ledger where only the amounts from balance column accounts are posted. T-accounts are a visual representation of ledger accounts and do not replace the need for a general journal. While electronic accounting systems may streamline the process, a general journal is still necessary to maintain an accurate record of all transactions.

Question 4

All of the following statements accurately describe the debt ratio except.
A) It is of use to both internal and external users of accounting information.
B) A relatively high ratio is always desirable.
C) The dividing line for a high and low ratio varies from industry to industry.
D) Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

Accepted Answer

A relatively high debt ratio is not always desirable as it indicates a larger portion of a company's assets are financed by debt rather than equity, which can increase financial risk. Ideally, a company would strive for a moderate debt ratio that balances the benefits of leverage with financial stability.

Question 5

Identify the statement below that is true.
A) If the trial balance is in balance, it proves that no errors have been made in recording and posting transactions.
B) The trial balance is a book of original entry.
C) Another name for the trial balance is the chart of accounts.
D) The trial balance is a list of all accounts from the ledger with their balances at a point in time.
E) The trial balance is another name for the balance sheet as long as debits balance with credits.

Accepted Answer

The statement that is true is that "The trial balance is a list of all accounts from the ledger with their balances at a point in time." This is an accurate definition of a trial balance, which is a tool used in accounting to ensure that debits and credits are equal and the ledger is in balance. Option A is incorrect because even though a balanced trial balance is a good indication that errors may not exist, it does not guarantee their absence. Option B is incorrect because the trial balance is not a book of original entry. Option C is incorrect because the chart of accounts includes a list of all accounts, but it is not the same as a trial balance. Option E is incorrect because the trial balance and balance sheet are not the same thing, even if the debits and credits balance.

Question 6

The balance column in a ledger account is:
A) An account entered on the balance sheet.
B) A column for showing the balance of the account after each entry is posted.
C) Another name for the dividends account.
D) An account used to record the transfers of assets from a business to its stockholders.
E) A simple form of account that is widely used in accounting to illustrate the debits and credits required in recording a transaction.

Accepted Answer

The balance column in a ledger account is a column for showing the balance of the account after each entry is posted.

Question 7

The process of transferring general journal entry information to the ledger is called:
A) Double-entry accounting.
B) Posting.
C) Balancing an account.
D) Journalizing.
E) Not required unless debits do not equal credits.

Accepted Answer

The process of transferring general journal entry information to the ledger is called posting. Posting involves recording the debits and credits from each journal entry into the corresponding accounts in the ledger. This allows for the accumulation and organization of all financial transactions in one centralized location for easy analysis and reporting.

Question 8

At the end of its first month of operations, Michael's Consulting Services, Inc. reported net income of $25,000. They also had account balances of: Cash, $18,000; Office Supplies, $2,000 and Accounts Receivable $10,000. The stockholders' total investment for this first month was $5,000.
Calculate the ending balance in Stockholders' Equity to be reported on the Balance Sheet.
A) $30,000
B) $25,000
C) $20,000
D) $ 5,000
E) $ 7,000

Accepted Answer

Common Stock $5,000 + Net Income $25,000 = $30,000

Question 9

At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:
A) 300%.
B) 33.3%
C) 75.0%.
D) 66.67%.
E) $400,000.

Accepted Answer

Debt Ratio = Total Liabilities/Total Assets
Debt Ratio = $300,000/$400,000*; Debt Ratio = 0.75 = 75%
*Total Assets = Total Liabilities + Total Equity
Total Assets = $300,000 + $100,000; Total Assets = $400,000

Question 10

A column in journals and ledger accounts that is used to cross reference journal and ledger entries is the:
A) Account balance column.
B) Debit column.
C) Posting reference column.
D) Credit column.
E) Description column.

Accepted Answer

The posting reference column is used to cross reference journal and ledger entries. It indicates the page number and line number of the journal entry where the transaction was recorded or the ledger account where the transaction was posted. This helps in tracing the source of an entry and ensures that all transactions are properly recorded and posted. The other columns listed are used for recording transactions and do not cross reference journal and ledger entries.

Question 11

Smiles Entertainment had the following accounts and balances at December 31: $\begin{array}{c}
\begin{array}{|l|}
 \hline \text { Account}\
 \hline \text { Cash}\
 \hline \text { Accounts Receivable}\
 \hline \text {  Prepaid Insurance}\ 
 \hline \text {Supplies.}\
 \hline \text {Accounts Payable}\
 \hline \text {Common Stock}\
 \hline \text {Service Revenue}\
\hline \text {Salaries Expense}\
 \hline \text {Utilities Expense}\
 \hline\text { Totals }\
\hline 
\end{array}
\begin{array}{r|r|}
\hline \text { Debit } & \text { Credit } \
\hline \$ 10,000 & \
\hline 2,000 & \
\hline 2,400 & \
\hline 1,000 & \
\hline & \$ 5,000 \
\hline & 4,900 \
\hline & 7,000 \
\hline 500 & \
\hline 1,000 & \
\hline \underline{\$ 16,900} & \underline{\$ 16,900} \
\hline 
\end{array}
\end{array}$

Using the information in the table, calculate the company's reported net income for the period.
A) $ 1,100
B) $ 4,000.
C) $ 4,500.
D) $10,400.
E) $ 5,500

Accepted Answer

The answer of Smiles Entertainment had the following accounts and...

Question 12

Jackson Consulting, Inc. had the following accounts and balances at December 31: $\begin{array}{c}
\begin{array}{|l}
 \hline \text { Account}\
 \hline \text { Cash}\
 \hline \text { Accounts Receivable}\
 \hline \text { Prepaid Insurance}\
 \hline \text { Supplies}\
 \hline \text { Accounts Payable}\
 \hline \text { Common Stock}\
 \hline \text { Dividends}\
 \hline \text { Service Revenue.}\
 \hline \text { Utilities Expense}\
 \hline \text { Salaries Expense}\
 \hline \text { Totals}\
 \hline
\end{array}
\begin{array}{|r|r|}
\hline \text { Debit } & \text { Credit } \
\hline \$ 20,000 & \
\hline 6,000 & \
\hline 1,500 & \
\hline 5,000 & \
\hline & \$ 500 \
\hline & 16,200 \
\hline 1,000 & \
\hline & 20,000 \
\hline 2,000 & \
\hline 1,200 & \
\hline\underline{ \$ 36,700 }& \underline{\$ 36,700 }\
\hline
\end{array}
\end{array}$

Using the information in the table, calculate Jackson Consulting Inc.'s reported net income for the period.
A) $16,800
B) $15,800.
C) $15,300
D) $10,300.
E) $32,000

Accepted Answer

Net income is calculated as Service Revenue minus expenses. Service Revenue is $20,000. Utilities Expense is $2,000 and Salaries Expense is $1,200. Therefore, net income is $20,000 - $2,000 - $1,200 = $16,800.

Question 13

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n):
A) Account.
B) Trial balance.
C) Journal.
D) T-account.
E) Balance column account.

Accepted Answer

The description matches that of a journal, which is used to record transactions in chronological order before they are transferred to the appropriate accounts in the ledger. The other options listed are not as applicable to this description.

Question 14

At the beginning of the current year, Trenton Company Inc.'s total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in stockholders' equity during the year and total assets at the end of the year were $260,000. Trenton Company's debt ratio at the end of the current year is:
A) 70.6%.
B) 67.3%.
C) 32.7%.
D) 48.6%.
E) 1.42%.

Accepted Answer

Debt Ratio = Total Liabilities/Total Assets
Debt Ratio = $175,000**/$260,000; Debt Ratio = 0.6730 = 67.3%
*Beginning Total Assets = Beginning Total Liabilities + Beginning Total Equity
$248,000 = $175,000 + Beginning Total Equity; Beginning Total Equity = $73,000
**Ending Total Assets = Ending Total Liabilities + Ending Total Equity
$260,000 = Ending Total Liabilities + (Beginning Equity + Revenues - Expenses -
Dividends)
$260,000 = Ending Total Liabilities + ($73,000 + $93,000 - $76,000- $5,000)
$260,000 = Ending Total Liabilities + $85,000; Ending Total Liabilities = $175,000

Question 15

Identify the accounts that would normally have balances in the debit column of a business's trial balance.
A) Assets and expenses.
B) Assets and revenues.
C) Revenues and expenses.
D) Liabilities and expenses.
E) Liabilities and dividends.

Accepted Answer

Accounts that would normally have balances in the debit column of a business's trial balance are assets and expenses. Debits increase the balances of these accounts.

Question 16

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

Accepted Answer

Revenues and liabilities normally have credit balances. Revenues increase with credits and decrease with debits, reflecting the inflow of assets from the sale of goods or services. Liabilities increase with credits because they represent amounts the business owes, which decrease with payments (debits).

Question 17

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.
A) 35.1%.
B) 26.0%.
C) 38.5%.
D) 28.5%.
E) 58.8%.

Accepted Answer

Debt Ratio = Total Liabilities/Total Assets
Debt Ratio = $100 million/$385 million; Debt Ratio = 0.2597 = 26.0%

Question 18

Which of the following is not a step in the accounting process?
A) Record relevant transactions and events in a journal
B) Post journal information to the ledger accounts
C) Prepare and analyze the trial balance.
D) Analyzing each transaction
E) Verify that revenues and expenses are equal.

Accepted Answer

The answer of Which of the following is not a...

Question 19

The chronological record of each complete transaction that has occurred is called the:
A) Account balance.
B) Ledger.
C) Journal.
D) Trial balance.
E) Cash account.

Accepted Answer

The journal is where all transactions are recorded in chronological order as they occur. The ledger may contain a record of all transactions but it is not organized chronologically. The account balance is the current balance of a specific account, not a record of all transactions. The trial balance is a list of all accounts and their balances, not a record of transactions. The cash account is a specific ledger account that tracks the inflows and outflows of cash, but it is not a record of all transactions.

Question 20

Bologna Lodging, Inc. had the following accounts and balances as of December 31: $\begin{array}{c}
\begin{array}{|l}
\hline \text { Account}\
\hline \text { Cash}\
\hline \text { Accounts Receivable}\
\hline \text { Salaries Expense}\
\hline \text { Accounts Payable}\
\hline \text { Lodging Revenue}\
\hline \text { Utilities Expense}\
\hline \text { Prepaid Insurance}\
\hline \text { Supplies}\
\hline \text { Common Stock}\
\hline \text { Totals}\
\hline
\end{array}
\begin{array}{|r|r|}
\hline{\text { Debit }} & \text { Credit } \
\hline \$ 20,000 & \
\hline 2,000 & \
\hline 500 & \
\hline & \$ 4,000 \
\hline & 7,000 \
\hline 500 & \
\hline 1,400 & \
\hline 1,500 & \
\hline & 14,900 \
\hline\underline{ \$ 25,900 }&\underline{ \$ 25,900} \
\hline 
\end{array}
\end{array}$
 Using the information in the table, calculate the total assets reported on Bologna's balance sheet for the period.
A) $ 24,900
B) $ 25,400.
C) $ 22,500.
D) $ 25,900.
E) $ 23,400

Accepted Answer

The answer of Bologna Lodging, Inc. had the following accounts...

Quiz 2: Analyzing for Business Transactions

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

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) :

A general journal is:

All of the following statements accurately describe the debt ratio except.

Identify the statement below that is true.

The balance column in a ledger account is:

The process of transferring general journal entry information to the ledger is called:

At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

A column in journals and ledger accounts that is used to cross reference journal and ledger entries is the:

A record in which the effects of transactions are first recorded and from which transaction amounts are posted to the ledger is a(n) :

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

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

Happiness Catering has total assets of $385 million. Its total liabilities are $100 million and its equity is $285 million. Calculate its debt ratio.

Which of the following is not a step in the accounting process?

The chronological record of each complete transaction that has occurred is called the: