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Exam 2: Analyzing and Recording Transactions

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Question 31

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For each of the following (1) identify the type of account as an asset, liability, equity, revenue, or expense, and (2) identify the normal balance of the account.

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Question 32

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On February 5, Textron Stores purchased a van that cost $35,000. The firm made a down payment of $5,000 cash and signed a long-term note payable for the balance. Show the general journal entry to record this transaction.

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Question 33

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Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts, that is, assets first, then liabilities, then owner's capital and withdrawals, followed by revenues and expenses.

The three general categories of accounts in a general ledger are _________________, ________________, and _________________________.

Hal Smith opened Smith's Repairs on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: 1. Smith invested $25,000 cash in the business. 2) Smith contributed $100,000 of equipment to the business. 3) The company paid $2,000 cash to rent office space for the month. 4) The company received $16,000 cash for repair services provided during March. 5) The company paid $6,200 for salaries for the month. 6) The company provided $3,000 of services to customers on account. 7) The company paid cash of $500 for monthly utilities. 8) The company received $3,100 cash in advance of providing repair services to a customer. 9) Smith withdrew $5,000 for his personal use from the company. Based on this information, net income for March would be:

_______________ is the process of transferring journal entry information to the ledger.

Tom Pines decided to open a bed and breakfast in his hometown. Prepare journal entries to record the following transactions.

A formal promise to pay (in the form of a promissory note) a future amount is a(n) :

The higher a company's debt ratio is, the higher the risk of a company not being able to meet its obligations.

Based on the following trial balance for Smyth's Repair Shop, prepare an income statement, statement of owner's equity, and a balance sheet. Smyth made no additional investments in the company during the year.

Source documents:

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

Analyze each transaction and event from source documents. 2. Record relevant transactions and events in a journal. 3. Post journal entry information to ledger accounts. 4. Prepare and analyze the trial balance.

What is a trial balance? What is its purpose?

The accounting process begins with:

All of the following statements regarding a sales invoice are except:

Unearned revenues are liabilities.

The following is a list of accounts and identification letters A through J for Shannon Management Co.: Use the form below to identify the type of account and its normal balance. The first item is filled in as an example.

Indicate whether a debit or credit entry would be made to record the following changes in each account. a. To decrease Cash. b. To increase Owner, Capital. c. To decrease Accounts Payable. d. To increase Salaries Expense. e. To decrease Supplies. f. To increase Revenue. g. To decrease Accounts Receivable. h. To increase Owner, Withdrawals.

Match the following definitions and terms by placing the letter that identifies the best definition in the blank space next to the term.