Question 1

As Withdrawals increase:

Accepted Answer

Withdrawals are a reduction in the owner's investment in the business, therefore when withdrawals increase, owner's equity decreases.

Question 2

Antonio's catered a reception.The total price was $500.The customer paid half of the fee in cash and placed the remainder on account.The journal entry to record this transaction is:

Accepted Answer

The correct entry records $250 cash received and $250 as accounts receivable, totaling $500 in catering service fees.

Question 3

Renzi's Volleyball Gym purchased equipment for $1,200.It made a down payment of $500 with the remainder on account.The journal entry to record this transaction is:

Accepted Answer

The equipment is recorded as an asset for $1,200. The down payment of $500 is recorded as a cash outflow, and the remaining $700 is recorded as accounts payable.

Question 4

The journal entry to record a withdrawal by the owner would most commonly include:

Accepted Answer

Withdrawals by the owner represent personal use of company funds and are recorded as a reduction of owner's equity. Therefore, a debit is made to the owner's Withdrawals account and a credit is made to the company's Cash account. Option A is incorrect because it records the withdrawal as an expense, which is incorrect. Option B is incorrect because it records the withdrawal directly to the owner's Capital account, which can obscure details of the owner's transactions with the company. Option D is incorrect because it records the withdrawal as an expense, which is incorrect.

Question 5

The journal entry to record an investment by the owner would most commonly include:

Accepted Answer

When an owner makes an investment in their own business, they are putting their own personal funds into the company. This would increase the company's assets (Cash) and increase the Owner's Equity (Capital). Therefore, the journal entry to record an investment by the owner would include a debit to Cash and a credit to Capital.

Question 6

If Accounts Receivable has been credited,it is most likely that:

Accepted Answer

When Accounts Receivable is credited, it means that the company has received payment from a customer, which reduces the balance of Accounts Receivable. Therefore, choice A is the best option. B and C are not possible because they would result in a debit to Accounts Receivable, not a credit.

Question 7

The entry to record completing a financial lecture and immediately collecting payment from customers would be:

Accepted Answer

The correct entry is to debit Cash (asset increase) and credit Lecture Fees (revenue increase) when payment is collected immediately after the service is provided.

Question 8

A transaction completed by Norton Company caused a $4,000 increase in both the total assets and the total liabilities.This transaction could have been:

Accepted Answer

The transaction described in option A involves purchasing office equipment for $12,000, paying $8,000 in cash, and the remaining $4,000 on account. This increases both assets (equipment) and liabilities (accounts payable) by $4,000.

Question 9

The general journal does NOT have a column titled:

Accepted Answer

The general journal does not have a balance column. The purpose of the general journal is to record all transactions in chronological order using the date, account titles and descriptions, and debits and credits. The balance of each account is calculated separately in the general ledger.

Question 10

On July 1,Hill's Construction paid six months' insurance in advance.The journal entry to record this transaction is:

Accepted Answer

Hill's Construction paid the insurance in advance, which means that they haven't incurred the expense yet. Therefore, the transaction should be recorded as a prepaid expense. Debiting Prepaid Insurance represents the increase in assets, while crediting Cash represents the reduction in assets.

Question 11

Conner Sales' total assets and total liabilities increased $600.The transaction could have been:

Accepted Answer

Option B involves both a cash payment (down payment of $200) and an increase in accounts payable (remainder paid on account), which would result in an increase in both total assets and total liabilities by $600. The other options do not involve a change in liabilities or do not total to a $600 increase in assets and liabilities.

Question 12

Riley's Book Review billed customers $550.The journal entry to record this transaction is:

Accepted Answer

When billing customers, Accounts Receivable is debited to show the amount owed by customers, and Editing Fees is credited to recognize the revenue earned.

Question 13

Interim statements are prepared to:

Accepted Answer

Interim statements are prepared to notify management of the company's current financial position and allow them to make changes to the business before processing year-end financial statements. They also serve as a way to notify investors of the company's current financial position. Therefore, all of the above options are correct.

Question 14

A calendar year is:

Accepted Answer

A calendar year is defined as the 12-month period beginning with January and ending with December. It is used as a standard for tracking time and financial reporting in many industries. Choice A is incorrect because a business can choose any 12-month period for its accounting year, but a calendar year specifically refers to the January-December timeframe. Choice C is incorrect because an interim financial statement can be completed for any period of time, not just the calendar year.

Question 15

The journal entry to record an shift of assets would include:

Accepted Answer

When shifting assets, such as receiving cash for accounts receivable, you debit Cash (increasing the asset) and credit Accounts Receivable (decreasing the asset).

Question 16

Which of the following accounts would be debited in a proper journal entry?

Accepted Answer

The answer of Which of the following accounts would be...

Question 17

If Accounts Payable has been credited,it is most likely that:

Accepted Answer

Accounts Payable is a liability account that represents money owed to suppliers or vendors. When a company makes a purchase on account, its Accounts Payable account is credited to reflect the increase in the liability. Therefore, option C is the correct choice.

Question 18

During the month of October,Ford advertised on the Internet.Ford received the bill for $600 in October,but waited until November to pay the advertising expense.The journal entry to record the payment in November is:

Accepted Answer

The correct entry in November is to debit Accounts Payable and credit Cash, as the expense was already recorded in October when the bill was received.

Question 19

The general journal entry to record the purchase of an asset for cash would include:

Accepted Answer

When purchasing an asset for cash, you debit the asset account (Supplies) to increase it and credit the Cash account to decrease it.

Question 20

BNL completed a performance and collected revenue of $10,000 not previously billed or recorded.The journal entry to record the collection would be:

Accepted Answer

The correct entry is to debit Cash for $10,000 and credit Performance Fees for $10,000, reflecting the collection of revenue for services performed.

Quiz 3: Beginning the Accounting Cycle