FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 2: Recording Business Transactions

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

Regarding the double-entry system, which of the following statements is incorrect?

A) A transaction would be incomplete if only one side were recorded.
B) Because of technology, the use of the double-entry system of accounting is optional.
C) The double-entry system is a system of accounting in which every transaction affects at least two accounts.
D) If office supplies are purchased on account, the account Office Supplies increases and the account Accounts Payable increases.

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

Accounts Receivable is a(n) ________ account and has a normal ________ balance.

A) liability; debit
B) asset; debit
C) liability; credit
D) asset; credit

Correct Answer

verified

Show Answer

Question 43

Essay

Review LaterAdd Note

Mason's Restaurant and Catering had the following transactions during the month of May. May 1 Mason contributed $\$ 45,000$ cash in exchange for common stock. $\quad$ $\quad$ 5 Paid monthly rent on the restaurant equipment, $\$ 1,650$ . $\quad$ $\quad$ 12 Purchased office supplies on account, $\$ 1,500$ . $\quad$ $\quad$ 15 Borrowed $\$ 25,000$ from the bank for business use. $\quad$ $\quad$ 26 Paid $\$ 30,000$ cash for a delivery van. $\quad$ $\quad$ 28 Paid $\$ 1,500$ on account. $\quad$ $\quad$ 29 The business received $\$ 1,600$ for catering services for a wedding on $\quad$ $\quad$ June 11 . $\quad$ $\quad$ 31 Revenues earned during the month included $\$ 20,500$ cash and $\quad$ $\quad$ $\quad$$\$ 14,500$ on account. $\quad$ $\quad$ 31 Received the May utility bill for $\$ 1,000$ . The amount is due on June $\quad$ $\quad$ 10 and will be paid on that date. $\quad$ $\quad$ 31 Paid employees' salaries $\$ 5,500$ ; restaurant rent $\$ 3,000$ and $\quad$ $\quad$ $\quad$ advertising for May $\$ 800$ . Record a compound entry. $\quad$ $\quad$ 31 Received the bill for catering food and supplies used in May, $\$ 8,500$ . $\quad$ $\quad$ The bill is due on June 15 and will be paid on that date. $\quad$ $\quad$ 31 Paid cash dividends of $\$ 6,000$ . The business uses the following accounts: Cash; Accounts Receivable; Office Supplies; Delivery Van; Accounts Payable; Utilities Payable; Unearned Revenue; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Equipment Rent Expense; Restaurant Rent Expense; Utilities Expense; Catering Expense; and Advertising Expense. Required: Journalize each transaction. Explanations are not needed.

When a business makes a cash payment, the Cash account is debited.

Which of the following journal entries would be recorded if a business purchased office supplies on account in a previous accounting period and now makes a cash payment of $750 to the supplier to settle the account?

If the total debits equal the total credits on the trial balance, the individual account balances will be error free.

Which of the following statements is true of revenues?

A business performs services for a customer for $26,000 on account. Which of the following accounts is credited?

A debit always means a decrease, and a credit always means an increase.

A business collects cash from a customer for services that were performed one month earlier. Which of the following accounts is credited?

All asset accounts and equity accounts increase with a debit.

Saturn, Inc. paid the rent for the current month in cash. Which of the following accounts will be used to record the transaction?

Consider the following accounts and identify each as an asset (A), liability (L), or equity (E). $\begin{array} { | l | l | } \hline \text { Common Stock } &\quad\quad\quad\quad \\\hline \text { Accounts Receivable } & \\\hline \text { Dividends } & \\\hline \text { Service Revenue } & \\\hline \text { Prepaid Rent } & \\\hline\end{array}$

Briefly describe each of the following source documents: $\begin{array} { | l | l | } \hline \text { Source Document } & \text { Description } \\\hline \text { Bank checks } & \\\hline \text { Sales invoices } & \\\hline\end{array}$

A payable involves a future receipt of cash.

A customer's promise to pay in the future for services or goods sold is called a(n) ________.

When using a four-column account, the posting reference column allows the user of the financial data to trace the amounts in the journal back to the ledger.

An account is a detailed record of all increases and decreases that have occurred in an individual asset, liability, or equity during a specific period.

An accounting entry that is characterized by having multiple debits and/or multiple credits is called a ________ entry.

A business has the following transactions: The business receives $16,000 cash and issues common stock to stockholders. The business purchases $500 of office supplies on account. The business purchases $1,000 of furniture on account. The business performs services for various clients totaling $14,000 on account. The business pays $3,000 for salaries expense and $5,000 for rent expense. The business pays $500 to a supplier for the office supplies purchased earlier. The business collects $3,000 from one of its clients for services rendered earlier in the month. At the end of the month, all journal entries are posted to the ledger. Accounts Receivable will appear as which of the following?