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Exam 2: Analyzing Transactions

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Question 71

True/False

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When an account receivable is collected in cash, the total assets of the business increase.

A) True
B) False

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Question 72

Multiple Choice

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Which is the best explanation for this journal entry?

A) Purchased equipment, paid cash of $2,000, with the remainder to be paid in the future.
B) Purchased equipment, paid cash of $4,700, with the remainder to be received in the future.
C) Purchased equipment, paid cash for the entire amount.
D) Purchased equipment on credit.

E) B) and C)
F) C) and D)

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Question 73

Multiple Choice

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Which of the following groups of accounts have a normal debit balance?

A trial balance determines the accuracy of the numbers.

The totals at the bottom of the trial balance and the totals at the bottom of the balance sheet both show equality and balancing, and therefore should be equal.

The order of the flow of accounting data is (1) record in the ledger, (2) record in the journal, (3) prepare the financial statements.

On November 30th, it was discovered that a $550 of a transaction recording the purchase of office supplies was really office equipment. Prepare the journal entry to correct this situation.

Revenue accounts are increased by credits.

To determine the balance in an account, always subtract credits from debits.

A credit may signify a

A group of related accounts that make up a complete unit is called a trial balance.

Posting a part of a transaction to the wrong account will cause the trial balance totals to be unequal.

Exhibit 2-1 All nine transactions for Ralston Sports Co. for September 2011, the first month of operations, are recorded in the following T accounts: Refer to Exhibit 2-1. Prepare a trial balance, listing the accounts in their proper order.

Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying $15,000 cash and the remainder on account.

Which of the following will increase retained earnings?

A credit to the cash account will increase the account.

(a) On October 10th, Nikle Company purchased supplies worth $2,750 on account. Prepare the journal entry to record this transaction. (b) Nikle Company paid for the supplies purchased in (a) on October 25th. Prepare the journal entry to record this transaction.

Which one of the statements below is not a purpose for the journal?

Depending on the account title, the right side of the account is referred to as the credit side.

The erroneous arrangement of digits, such as writing $45 as $54, is called a slide.