Question 1

Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Accounts Payable } & & 300 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 300 \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Dividends } & & 300 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Salaries Payable } & 300 & \
\hline \text { Salaries Expense } & & 300 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Salaries Expense } & 300 & \
\hline \text { Cash } & & 300 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Salaries Expense and credit Cash, reflecting the payment of cash for salaries.

Question 2

A law firm billed a client $1,800 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?
A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

Accepted Answer

The law firm performed work and earned legal fees revenue. Therefore, the firm should debit Accounts Receivable (an asset account) for the amount earned, $1,800, and credit Legal Fees Revenue (a revenue account) for the same amount. This reflects an increase in assets (accounts receivable) and an increase in revenue. Option A is incorrect because the firm did not receive payment yet, so unearned revenue is not appropriate. Option B is incorrect because cash was not received yet. Option C is incorrect as the debit and the credit accounts would be reversed. Option E is incorrect as cash was not received yet.

Question 3

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:
A) Debit to Unearned Management Fees for $60,000.
B) Credit to Management Fees Earned for $60,000.
C) Credit to Cash for $60,000.
D) Credit to Unearned Management Fees for $60,000.
E) Debit to Management Fees Earned for $60,000.

Accepted Answer

When a customer prepays for services, it creates a liability for the company until the services are rendered. Therefore, the journal entry to record the transaction will include a credit to the Unearned Management Fees account for $60,000, as this is the liability created by the prepayment. The corresponding debit will be to Cash, as the company received payment upfront.

Question 4

Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?
A) Debit Office supplies expense, $500; credit Cash, $500.
B) Debit Cash, $500; credit Office supplies, $500.
C) Debit Office supplies, $500; credit Cash, $500.
D) Debit Office supplies, $500; credit Accounts payable, $500.
E) Debit Accounts payable, $500; credit Office supplies, $500.

Accepted Answer

Since the office supplies were purchased on credit, the journal entry should include a credit to Accounts payable. Additionally, since the company's policy is to initially record prepaid and unearned items in balance sheet accounts, the debit should be to an asset account. Therefore, the correct journal entry is to debit Office supplies for $500 and credit Accounts payable for $500.

Question 5

Paul's Landscaping paid $500 on account for supplies purchased in the prior month. Which of the following general journal entries will Paul's Landscaping make to record this transaction?
A) Debit Office supplies expense, $500; credit Cash, $500.
B) Debit Cash, $500; credit Office supplies, $500.
C) Debit Office supplies, $500; credit Cash, $500.
D) Debit Office supplies, $500; credit Accounts payable, $500.
E) Debit Accounts payable, $500; credit Cash, $500.

Accepted Answer

Paul's Landscaping paid $500 on account, indicating that the company owed the money to a supplier (i.e., accounts payable). Therefore, Paul's Landscaping should debit accounts payable for $500 and credit cash for $500 to record this transaction.

Question 6

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:
A) Debit to Accounts Payable.
B) Debit to Accounts Receivable.
C) Credit to Cash.
D) Credit to Accounts Payable.
E) Credit to Common Stock.

Accepted Answer

When purchasing supplies on credit, Accounts Payable is increased (credited) to reflect the debt owed to the supplier. Therefore, the general journal entry made by Willow Rentals should include a credit to Accounts Payable. The correct journal entry would be a debit to Office Supplies and a credit to Accounts Payable. Option A is correct in identifying the debit account, but the credit account should be Accounts Payable, not Cash. Options B, C, and E are all incorrect.

Question 7

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a
A) Debit to Telephone Expense for $300.
B) Credit to Accounts Payable for $300.
C) Debit to Cash for $300.
D) Credit to Telephone Expense for $300.
E) Debit to Accounts Payable for $300.

Accepted Answer

The answer of Ralph Pine Consulting received its telephone bill...

Question 8

A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?
A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

Accepted Answer

When a law firm collects cash on account for work already performed, it increases its Cash account (an asset) and decreases its Accounts Receivable (also an asset). This is because the firm is receiving payment for a service it has already recorded as revenue, thus the correct entry is to debit Cash (to increase it) and credit Accounts Receivable (to decrease it).

Question 9

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?
A) $\begin{array} { | l | c | c | } 
\hline \text { Cash } & 1,500 \
\hline \text { Accounts Receivable } & & 1,500\
\hline
\end{array}$
B) $\begin{array} { | l | c | c | } 
\hline \text { Cash } & 1,500 \
\hline \text { Wrearied Desigr Reverue } & &1,500\
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,500 \
\hline \text { Unearned Desigri Reverue } & & 1,500 \
\hline
\end{array}$
D) $\begin{array} { | l | c | c | } 
\hline \text { Cash } & 1,500 \
\hline \text { Desigr Reverue } && 1,500\
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,500 & \
\hline \text { Cash } & & 1,500 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Cash and credit Accounts Receivable, as the payment is for a previously billed service, reducing the Accounts Receivable balance.

Question 10

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?
A) $\begin{array} { | l | r | r | } 
\hline \text { Utilities Experise } & 400 & \
\hline \text { Cash } & & 400 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Utilities Experise } & 400 & \
\hline \text { Accounts Payable } & & 400 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 400 & \
\hline \text { Utilities Expense } & & 400 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { No jourial entry is required } & \quad\quad\quad\quad\quad& \
\hline \text {  } & &  \quad\quad\quad\quad\quad\
\hline
\end{array}$

Accepted Answer

Since the bill is not due until the end of the next month, Able Graphics has not yet paid for the electricity they used. Therefore, the appropriate journal entry is to debit Utilities Expense and credit Accounts Payable. This recognizes the expense in the current period and creates a liability to pay for it in the next period when the bill is due. Choice A is incorrect because it credits cash, but Able Graphics has not yet paid for the utility bill. Choice B is incorrect because it debits cash, but Able Graphics has not yet paid for the utility bill. Choice D is incorrect because it credits the wrong account - Utilities Expense should be debited, not credited. Choice E is incorrect because Able Graphics still owes the money for the utility bill, so a journal entry is required to record the liability.

Question 11

Richard Redden, the sole stockholder, contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business, RR Consulting. Which of the following general journal entries will RR Consulting make to record this transaction?
A) Debit Assets $200,000; credit Common Stock, $200,000.
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000.
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000.
D) Debit Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000.
E) Debit Common Stock, $200,000; credit Assets, $200,000.

Accepted Answer

The transaction involves a cash contribution of $70,000 and land worth $130,000 in exchange for common stock. Therefore, the company will debit cash for $70,000 and land for $130,000 and credit common stock for $200,000, which is the fair market value of the consideration received. Option A is incorrect because it does not specify which asset account to debit. Option B is incorrect because it combines two different types of assets in a single debit account. Option D is incorrect because it shows the credit to common stock before the debits to cash and land, which is not logical. Option E is incorrect because it implies that the company received assets other than cash and land in exchange for common stock, which is not the case in this transaction.

Question 12

An asset created by prepayment of an insurance premium is:
A) Recorded as a debit to Unearned Revenue.
B) Recorded as a debit to Prepaid Insurance.
C) Recorded as a credit to Unearned Revenue.
D) Recorded as a credit to Prepaid Insurance.
E) Not recorded in the accounting records until the insurance period expires.

Accepted Answer

When an insurance premium is pre-paid, it creates a current asset called Prepaid Insurance. Therefore, the prepayment is recorded as a debit to Prepaid Insurance.

Question 13

J. Brown Consulting paid $2,500 cash for a 5-month insurance policy which begins on December 1. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record the cash payment. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
A) $\begin{array} { | l | r | r | } 
\hline \text { Irsurarice Expense } & 2,500 & \
\hline \text { Cash } & & 2,500 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 2,500 & \
\hline \text { Irnsurance Expense } & & 2,500 \
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 2,500 & \
\hline \text { Prepaid Irsurarace } & & 2,500 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Prepaid Irsurance } & 2,500 & \
\hline \text { Cash } & & 2,500 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Irsurarice Expense } & 2,500 & \
\hline \text { Prepaid Irsurarace } & & 2,500 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Prepaid Insurance and credit Cash, as the payment is for a future benefit and should be recorded as an asset initially.

Question 14

J. Smith, the sole stockholder, received a $100 dividend from Jay's Limo Services. Which of the following general journal entries will Jay's Limo Services make to record this transaction?
A) $\begin{array}{|l|r|r|}
\hline \text { Dividends } & 100 & \
\hline \text { Cash } & & 100 \
\hline
\end{array}$
B) $\begin{array}{|l|r|r|}
\hline \text { Cash  } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Common Stock } & 100 & \
\hline \text { Dividends } & & 100 \
\hline
\end{array}$
D) $\begin{array}{|l|r|r|}
\hline \text { Dividends } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$
E) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 100 & \
\hline \text { Common Stock } & & 100 \
\hline
\end{array}$

Accepted Answer

The correct entry is to debit Dividends and credit Cash, as dividends are a distribution of earnings to shareholders and reduce retained earnings, while cash is decreased by the payment.

Question 15

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
A) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Payable } & 7,000 & \
\hline \text { Supplies } & & 7,000 \
\hline
\end{array}$
B) $\begin{array} { | l | c | c | } 
\hline \text { Cash } & 7,000 \
\hline \text { Supplies } & & 7,000\
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Cash } & & 7,000 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Supplies } & 7,000 & \
\hline \text { Accourts Payable } & & 7,000 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Supplies Experse } & 7,000 & \
\hline \text { Accourts Payable } & & 7,000 \
\hline
\end{array}$

Accepted Answer

Since Wiley Consulting pays cash immediately, it means that they do not owe any money to anyone. Therefore, option A and D can be eliminated as they record the transaction as a payable. Option B can also be eliminated since there is no mention of cash being paid out, which is not possible in this transaction. Option E records the supplies as an expense, which is incorrect as they are an asset until they are used up. Thus, the only correct option is C, which records the purchase of supplies with cash.

Question 16

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.
A) $\begin{array} { | l | r | r | } 
\hline \text { Unearned Catering Reverue } & 1,000 \
\hline \text { Catering Reverue } & & 1,000 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Catering Reverue } & 1,000 \
\hline \text { Accourts Receivable } & & 1,000 \
\hline
\end{array}$
C) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,000 \
\hline \text { Unearned Catering Reverue } & & 1,000 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 1,000 \
\hline \text { Catering Reverue } & & 1,000 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 1,000 \
\hline \text { Catering Revenue } & & 1,000 \
\hline
\end{array}$

Accepted Answer

The transaction involves Grills R Us Catering providing catering services and billing its client for the amount owed. This means that the company has earned revenue (Catering Revenue) and is entitled to receive payment (Accounts Receivable) from the client. Therefore, the journal entry should include both accounts, and the best choice that includes both accounts is option D.

Question 17

ABC Catering received $800 cash from a customer for catering services to be provided next month. Given the choices below, determine the general journal entry that ABC Catering will make to record the cash receipt. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.
A) $\begin{array} { | l | r | r | } 
\hline \text { Unearned Catering Revenue } & 800 & \
\hline \text { Catering Revenue } & & 800 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 800 & \
\hline \text { Accourts Receivable } & & 800 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 800 & \
\hline \text { Unearned Catering Revenue } & & 800 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 800 \
\hline \text { Catering Reverue } & & 800 \
\hline
\end{array}$
E) $\begin{array} { | l | r | r | } 
\hline \text { Accourts Receivable } & 800 \
\hline \text { Catering Reverue } & & 800 \
\hline
\end{array}$

Accepted Answer

The cash received for services to be rendered next month indicates a prepayment or an unearned amount. Therefore, the company will initially record the cash receipt as unearned revenue which is a liability account. The entry is debit cash for $800 and credit unearned catering revenue for $800. Option C is the only entry that includes a debit to cash and a credit to unearned catering revenue.

Question 18

A law firm collected $1,800 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?
A) Debit Accounts Receivable, $1,800; credit Unearned Legal Fees Revenue, $1,800.
B) Debit Cash, $1,800; credit Unearned Legal Fees Revenue, $1,800.
C) Debit Legal Fees Revenue, $1,800; credit Accounts Receivable, $1,800.
D) Debit Accounts Receivable, $1,800; credit Legal Fees Revenue, $1,800.
E) Debit Cash, $1,800; credit Accounts Receivable, $1,800.

Accepted Answer

The law firm received cash of $1,800, so it would debit Cash for $1,800. However, the work has not yet been performed, so the revenue is still unearned. Therefore, the firm would credit Unearned Legal Fees Revenue for $1,800.

Question 19

J. Brown Consulting immediately paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.
A) $\begin{array} { | l | r | r | } 
\hline \text { Utilities Experise } & 500 \
\hline \text { Cash } & & 500 \
\hline
\end{array}$
B) $\begin{array} { | l | r | r | } 
\hline \text { Cash } & 500 \
\hline \text { Utilities Expense } & & 500 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Cash } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$
D) $\begin{array} { | l | r | r | } 
\hline \text { Utilities Experise } & 500 \
\hline \text { Accourts Payable } & & 500 \
\hline
\end{array}$
E) $\begin{array}{|l|r|r|}
\hline \text { Prepaid Utilities } & 500 & \
\hline \text { Accounts Payable } & & 500 \
\hline
\end{array}$

Accepted Answer

The correct journal entry is to debit Utilities Expense for $500 and credit Cash for $500, reflecting the payment of utilities in cash.

Question 20

A double-entry accounting system is an accounting system:
A) That records each transaction twice.
B) That records the effects of transactions and other events in at least two accounts with equal debits and credits.
C) In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.
D) That may only be used if T-accounts are used.
E) That insures that errors never occur.

Accepted Answer

A double-entry accounting system requires that each transaction is recorded in at least two accounts with equal debits and credits, ensuring that the accounting equation (assets = liabilities + equity) remains balanced. This system does not necessarily require two debits and no credits, nor does it guarantee that errors will never occur. It is not dependent on the use of T-accounts, although they are often used to represent the accounts in this system.

Quiz 15: Analyzing for Business Transactions

Jay's Limo Services paid $300 cash to employees for work performed in the current period. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

A law firm billed a client $1,800 for work performed in the current month. Which of the following general journal entries will the firm make to record this transaction?

Golddigger Services, Inc. provides services to clients. On May 1, a client prepaid Golddigger Services $60,000 for 6-months services in advance. Golddigger Services' general journal entry to record this transaction will include a:

Paul's Landscaping purchased $500 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Paul's Landscaping paid $500 on account for supplies purchased in the prior month. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Willow Rentals purchased office supplies on credit. The general journal entry made by Willow Rentals will include a:

Ralph Pine Consulting received its telephone bill in the amount of $300, and immediately paid it. Pine's general journal entry to record this transaction will include a

A law firm collected $1,800 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?

Trimble Graphic Design receives $1,500 from a client billed in a previous month for services provided. Which of the following general journal entries will Trimble Graphic Design make to record this transaction?

Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?

Richard Redden, the sole stockholder, contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business, RR Consulting. Which of the following general journal entries will RR Consulting make to record this transaction?

An asset created by prepayment of an insurance premium is:

J. Smith, the sole stockholder, received a $100 dividend from Jay's Limo Services. Which of the following general journal entries will Jay's Limo Services make to record this transaction?

Wiley Consulting purchased $7,000 worth of supplies and paid cash immediately. Which of the following general journal entries will Wiley Consulting make to record this transaction? Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

Grills R Us Catering provided $1,000 of catering services and billed its client for the amount owed. Given the choices below, determine the general journal entry that Grills R Us Catering will make to record this transaction.

A law firm collected $1,800 for work to be performed in the following month. Which of the following general journal entries will the firm make to record this transaction?

J. Brown Consulting immediately paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that J. Brown Consulting will make to record this transaction.

A double-entry accounting system is an accounting system: