Question 1

On May 31, the Cash account of Tesla had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?
A) A $0 balance.
B) A $4,300 debit balance.
C) A $4,300 credit balance.
D) A $5,700 debit balance.
E) A $5,700 credit balance.

Accepted Answer

Beginning Cash Balance + Debits − Credits = Ending Cash Balance
Beginning Cash Balance + $12,200 − $11,500 = $5,000
Beginning Cash Balance + $700 = $5,000; Beginning Balance = $4,300 debit balance
 11eaadfd_cdf2_6f56_95d8_f58bd70c8b7d_TB6948_00

Question 2

Smart Consulting, paid cash dividends of $2,000 to its common stockholders. Identify the general journal entry below that Smart Consulting will make to record the transaction.
A) $\begin{array}{|l|r|l|}
\hline \text { Dividends } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$
B) $\begin{array}{|l|l|l|}
\hline \text { Common Stock } & 2,000 & \
\hline \text { Cash } & & 2,000 \
\hline
\end{array}$
C) $$\begin{array} { | l | r | r | } 
\hline \text { Dividends } & 2,000 \
\hline \text { Cormunon Stock } & & 2,000 \
\hline
\end{array}$$
D) $\begin{array}{|l|r|l|}
\hline \text { Cash } & 2,000 & \
\hline \text { Common Stock } & & 2,000 \
\hline
\end{array}$
E) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 2,000 \
\hline \text { Dividends } & & 2,000 \
\hline
\end{array}$$

Accepted Answer

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

Question 3

During the month of February, Rubio Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?
A) $700.
B) $1,100.
C) $2,900.
D) $0.
E) $4,300.

Accepted Answer

Beginning Cash Balance + Cash Receipts − Cash Disbursements = Ending Cash Balance
Beginning Cash Balance + $7,500 − $8,600 = $1,800
Beginning Cash Balance − $1,100 = $1,800
Beginning Cash Balance = $2,900
 11eaadfd_cdf3_32a8_95d8_09540b07b203_TB6948_00

Question 4

Marco Nelson opened a frame shop and completed these transactions: 1. Marco started the shop by investing $40,000 cash and equipment valued at $18,000 in exchange for common stock.
2) Purchased $70 of office supplies on credit.
3) Paid $1,200 cash for the receptionist's salary.
4) Sold a custom frame service and collected $1,500 cash on the sale.
5) Completed framing services and billed the client $200.
What was the balance of the cash account after these transactions were posted?
A) $300.
B) $41,500.
C) $40,300.
D) $38,500.
E) $38,700.

Accepted Answer

Ending Cash Balance = $40,000 (#1) − $1,200 (#3) + $1,500 (#4) = $40,300

Question 5

Silvia's Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. The client paid cash immediately. Identify the general journal entry below that Silvia's Studio will make to record the transaction.
A) $$\begin{array} { | l | r | r | } 
\hline \text { Rental Revenue } & 100 \
\hline \text { Instruction Revenue } & 150 & \
\hline \text { Cash } & & 250 \
\hline
\end{array}$$
B) $\begin{array}{|l|l|l|}
\hline \text { Accounts Payable } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$
C) $$\begin{array} { | l | r | r | } 
\hline \text { Cash } & 250 & \
\hline \text { Rental Reverue } & & 100 \
\hline \text { Irstruction Reverue } & & 150\\hline 
\end{array}$$
D) $$\begin{array} { | l | r | r | } 
\hline \text { Rental Reverue } & 100 \
\hline \text { Irstruction Reverue } & 150 & \
\hline \text { Accourits Receivable } & & 250\\hline 
\end{array}$$
E) $\begin{array}{|l|r|r|}
\hline \text { Unearned Revenue } & 250 & \
\hline \text { Rental Revenue } & & 100 \
\hline \text { Instruction Revenue } & & 150 \
\hline
\end{array}$

Accepted Answer

Silvia's Studio received cash, so Cash is debited for $250. Rental Revenue and Instruction Revenue are credited for $100 and $150, respectively, to record the income earned.

Question 6

If cash is received from customers in payment for services that have not yet been performed, the business would record the cash receipt as:
A) A debit to an unearned revenue account.
B) A debit to a prepaid expense account.
C) A credit to an unearned revenue account.
D) A credit to a prepaid expense account.
E) A credit to accounts payable.

Accepted Answer

When cash is received from customers for services that have not yet been performed, it is considered unearned revenue. The transaction should be recorded as a credit to the unearned revenue account because the business owes the customer for services not yet provided.

Question 7

The following transactions occurred during July: 1. Received $900 cash for services provided to a customer during July.
2) Issued common stock for $2,200 cash.
3) Received $750 from a customer in partial payment of his account receivable which arose from sales in June.
4) Provided services to a customer on credit, $375.
5) Borrowed $6,000 from the bank by signing a promissory note.
6) Received $1,250 cash from a customer for services to be performed next year.
What was the amount of revenue for July?
A) $900.
B) $1,275.
C) $2,525.
D) $3,275.
E) $11,100.

Accepted Answer

Revenues = $900 (from #1) + $375 (from #4) = $1,275

Question 8

If Tyrol Willow, the sole stockholder of Willow Hardware, withdraws cash of the business to purchase a family car, the business should record this use of cash with an entry to:
A) Debit Accounts Payable and credit Cash.
B) Debit Cash and credit Salary Expense.
C) Debit Cash and credit Dividends.
D) Debit Dividends and credit Cash.
E) Debit Cash and credit Cash.

Accepted Answer

When a sole stockholder withdraws cash from the business for personal use, it is recorded as a dividend. Therefore, the correct entry is to debit Dividends (increasing the dividends expense, which represents a distribution of earnings to the shareholder) and credit Cash (decreasing the asset).

Question 9

On January 1 of the current year, Jimmy's Sandwich Company reported total stockholders' equity of $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year the company paid $20,000 in dividends. No other changes in equity occurred during the year. The change in total equity during the year was:
A) A decrease of $9,500.
B) An increase of $9,500.
C) An increase of $30,500.
D) A decrease of $30,500.
E) An increase of $73,500.

Accepted Answer

Beg. Equity + Revenues − Expenses − Dividends = End. Equity
$122,500 + $96,000 − $85,500 − $20,000 = Ending Equity
Ending Equity = $113,000
Change in Equity = Beginning Equity − Ending Equity
Change in Equity = $122,500 − $113,000 = $9,500 Decrease

Question 10

The debt ratio is used:
A) To measure the ratio of equity to expenses.
B) To assess the risk associated with a company's use of liabilities.
C) To assess market expectations for future growth.
D) To determine how efficient the company is using its assets.
E) To determine the profitability of a company.

Accepted Answer

The debt ratio is used to assess the risk associated with a company's use of liabilities, by measuring the ratio of a company's total liabilities to its total assets. It indicates the extent to which a company is financing its operations through debt, and a higher debt ratio suggests higher financial leverage and higher risk.

Question 11

On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?
A) $5,000.
B) $47,000.
C) $52,000.
D) $57,000.
E) $32,000.

Accepted Answer

Beginning Accounts Receivable Balance + Credit Sales (Debits) − Customer Payments (Credits) = Ending Accounts Receivable Balance
$18,000 + Credit Sales (Debits) − $52,000 = $13,000
Credit Sales (Debits) − $34,000 = $13,000
Credit Sales (Debits) = $47,000
 11eaadfd_cdf2_bd77_95d8_7bc6b7903994_TB6948_00

Question 12

Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $40,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.
A) $\begin{array}{|l|r|l|}
\hline \text { Cash } & 40,000 & \
\hline \text { Common Stock } & & 40,000 \
\hline
\end{array}$
B) $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$
C) $\begin{array}{|l|r|l|}
\hline \text { Accounts Receivable } & 40,000 & \
\hline \text { Cash } & & 40,000 \
\hline
\end{array}$
D) $\begin{array}{|l|r|l|}
\hline \text { Investments } & 40,000 & \
\hline \text { Common Stock } & & 40,000 \
\hline
\end{array}$
E) $\begin{array}{|l|r|l|}
\hline \text { Cash } & 40,000 & \
\hline \text { Note Payable } & & 40,000 \
\hline
\end{array}$

Accepted Answer

The correct journal entry to record the investment of cash in exchange for common stock is to debit Cash and credit Common Stock. This reflects the increase in assets (Cash) and the increase in equity (Common Stock).

Question 13

A company provided $12,000 of consulting services and was immediately paid in cash by the customer. Identify the journal entry below that properly records this transaction.
A) $\begin{array}{|l|r|r|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$
B) $\begin{array}{|l|r|l|}
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting Services Revenue } & & 12,000 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Consulting Services Revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$
D) $\begin{array}{|l|r|l|}
\hline \text { Accounts Payable } & 12,000 & \
\hline \text { Consulting Services Revenue } & & 12,000 \
\hline
\end{array}$
E) $\begin{array}{|l|r|l|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting Services Revenue } & & 12,000 \
\hline
\end{array}$

Accepted Answer

The correct journal entry is to debit Cash for $12,000 and credit Consulting Services Revenue for $12,000, reflecting the receipt of cash and the earned revenue.

Question 14

Geoff Parker, the sole stockholder of Parker Tax Services, started the business by investing $10,000 cash and a building worth $20,000. Identify the general journal entry below that Parker Tax Services will make to record the transaction.
A) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 10,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$
B) $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 30,000 & \
\hline \text { Cash } & & 10,00 \
\hline \text { Building } & & 20,000 \
\hline
\end{array}$
C) $\begin{array}{|l|r|l|}
\hline \text { Cash } & 10,000 & \
\hline \text { Building } & 20,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$
D) $\begin{array}{|l|r|r|}
\hline \text { Notes Payable } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$
E) $\begin{array}{|l|r|r|}
\hline \text { Dividends } & 30,000 & \
\hline \text { Common Stock } & & 30,000 \
\hline
\end{array}$

Accepted Answer

The correct journal entry records the increase in assets (Cash and Building) and the corresponding increase in equity (Common Stock) due to the owner's investment.

Question 15

Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea invested $13,500 cash in the business in exchange for common stock.
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 cash account at the end of January would be:
A) $41,450.
B) $12,225.
C) $18,700.
D) $15,250.
E) $13,500.

Accepted Answer

Ending Cash Balance = $13,500 (#1) − $2,100 (#3) + $5,700 (#4) − $1,500 (#7) − $3,100 (#8) − $275 (#9) = $12,225

Question 16

Andrea Apple opened Apple Photography on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1. Andrea invested $13,500 cash in the business in exchange for common stock.
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 amount reported as total stockholders' equity on the balance sheet at month-end would be:
A) $31,400.
B) $39,200.
C) $31,150.
D) $40,175.
E) $30,875.

Accepted Answer

Ending Stockholders' Equity = $13,500 (#1) + $20,000 (#2) + $5,700 (#4) + $2,750 (#6) − $1,500 (#7) − $275 (#9) = $40,175

Question 17

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.
A) $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$
B) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 12,000 & \
\hline \text { Consulting Services Revenue } & & 12,000 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Consulting Services Revenue } & 12,000 & \
\hline \text { Cash } & & 12,000 \
\hline
\end{array}$
D) $\begin{array}{|l|r|l|}
\hline \text { Accounts Payable } & 12,000 \
\hline \text { Consulting Services Revenue } && 12,000 \
\hline
\end{array}$
E) $\begin{array}{|l|r|l|}
\hline \text { Accounts Receivable } & 12,000 & \
\hline \text { Consulting Services Revenue } & & 12,000 \
\hline
\end{array}$

Accepted Answer

The correct journal entry records an increase in Accounts Receivable (debit) and an increase in Consulting Services Revenue (credit) since the service was provided on account.

Question 18

Identify the correct formula below used to calculate the debt ratio.
A) Total Equity/Total Liabilities.
B) Total Liabilities/Total Equity.
C) Total Liabilities/Total Assets.
D) Total Assets/Total Liabilities.
E) Total Equity/Total Assets.

Accepted Answer

The debt ratio is calculated by dividing total liabilities by total assets. This measures the proportion of a company's total assets that are financed by debt.

Question 19

During the month of March, Harley's Computer Services made purchases on account totaling $43,500. Also during the month of March, Harley was paid $8,000 by a customer for services to be provided in the future and paid $36,900 of cash on its accounts payable balance. If the balance in the accounts payable account at the beginning of March was $77,300, what is the balance in accounts payable at the end of March?
A) $83,900.
B) $91,900.
C) $6,600.
D) $75,900.
E) $4,900.

Accepted Answer

Beginning Accounts Payable Balance + Purchases on Account − Payments on Accounts = Ending Accounts Payable Balance
$77,300 + $43,500 − $36,900 = Ending Accounts Payable Balance
Ending Accounts Payable = $83,900
 11eaadfd_cdf4_6b2a_95d8_4f1ad7c000e5_TB6948_00

Question 20

At the beginning of January of the current year, Sorrel Co.'s ledger reflected a normal balance of $52,000 for accounts receivable. During January, the company collected $14,800 from customers on account and provided additional services to customers on account totaling $12,500. Additionally, during January one customer paid Mikey $5,000 for services to be provided in the future. At the end of January, the balance in the accounts receivable account should be:
A) $54,700.
B) $49,700.
C) $2,300.
D) $54,300.
E) $49,300.

Accepted Answer

Beginning Accounts Receivable Balance + Services on Account − Collections from Customers = Ending Accounts Receivable Balance
$52,000 + $12,500 − $14,800 = Ending Accounts Receivable Balance
Ending Accounts Receivable = $49,700
 11eaadfd_cdf3_f5f9_95d8_ab31260c87e5_TB6948_00

Quiz 16: Accounting for Business Transactions

On May 31, the Cash account of Tesla had a normal balance of $5,000. During May, the account was debited for a total of $12,200 and credited for a total of $11,500. What was the balance in the Cash account at the beginning of May?

Smart Consulting, paid cash dividends of $2,000 to its common stockholders. Identify the general journal entry below that Smart Consulting will make to record the transaction.

During the month of February, Rubio Services had cash receipts of $7,500 and cash disbursements of $8,600. The February 28 cash balance was $1,800. What was the February 1 beginning cash balance?

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

If cash is received from customers in payment for services that have not yet been performed, the business would record the cash receipt as:

If Tyrol Willow, the sole stockholder of Willow Hardware, withdraws cash of the business to purchase a family car, the business should record this use of cash with an entry to:

The debt ratio is used:

On April 30, Gomez Services had an Accounts Receivable balance of $18,000. During the month of May, total credits to Accounts Receivable were $52,000 from customer payments. The May 31 Accounts Receivable balance was $13,000. What was the amount of credit sales during May?

Matthew Martin, the sole stockholder of Innovation Consulting, started the business by investing $40,000 cash in exchange for common stock. Identify the general journal entry below that Innovation Consulting will make to record the transaction.

A company provided $12,000 of consulting services and was immediately paid in cash by the customer. Identify the journal entry below that properly records this transaction.

Geoff Parker, the sole stockholder of Parker Tax Services, started the business by investing $10,000 cash and a building worth $20,000. Identify the general journal entry below that Parker Tax Services will make to record the transaction.

A company provided $12,000 of consulting services on account. The customer promises payment in 30 days. Identify the journal entry below that properly records this transaction.

Identify the correct formula below used to calculate the debt ratio.