Question 1

Latimer Company borrows $50,000 from the bank and signs a note that is due in three months.How would the company record this payment?
A)Debit Land for $50,000 and credit Notes Payable for $50,000.
B)Debit Cash for $50,000 and credit Notes Payable for $50,000.
C)Debit Notes Payable by $50,000 and credit Cash for $50,000.
D)Debit Cash for $50,000 and credit Accounts Payable for $50,000.
E)Debit Cash for $50,000 and credit Service Revenue for $50,000.

Accepted Answer

The company should record the payment by debiting Cash for the amount received ($50,000) and crediting Notes Payable for the amount owed ($50,000). This will reduce the company's liability on the note.

Question 2

Grotto Company pays a vendor $900 cash as partial payment for its earlier $1,800 purchase of supplies on credit.How would Grotto record this payment?
A)Debit Supplies by $900 and credit Accounts Payable by $900.
B)Debit Accounts Payable by $900 and credit Cash for $900.
C)Debit Accounts Payable by $900 and credit Supplies by $900.
D)Debit Supplies for $1,800,debit Accounts Payable for $900,and Credit Cash for $900.
E)Debit Supplies for $900,debit Accounts Payable for $900,and credit Cash for $1,800.

Accepted Answer

The payment of $900 cash should be recorded as a reduction of the accounts payable balance. To do so, Grotto would debit Accounts Payable by $900 and credit Cash for $900. This entry reflects that Grotto paid $900 in cash to the vendor for the amount they owed on their accounts payable balance.

Question 3

On April 15,Landscape by Design Inc.receives cash of $2,000 in advance from a customer who will be out of the country for landscaping services to be performed during the four-month period beginning on June 1.How would Landscape by Design record this transaction?
A)Debit Cash for $2,000 and Credit Unearned Revenue for $2,000.
B)Credit Cash for $2,000 and Debit Unearned Revenue for $2,000.
C)Debit Cash for $2,000 and Credit Landscape Revenue for $2,000.
D)Debit Accounts Receivable for $2,000 and credit Landscape Revenue for $2,000.
E)Debit Cash for $2,000 and Credit Accounts Receivable for $2,000.

Accepted Answer

Since the cash is received in advance, it is not yet earned revenue. Therefore, the company should record this as a liability called Unearned Revenue, and credit the cash received. This will balance the entry and will not affect the income statement until the service is performed. So, the correct journal entry for the transaction is to debit Cash for $2,000 and credit Unearned Revenue for $2,000.

Question 4

Eon Movers purchases supplies for $1,200 cash.How would Eon record this transaction?
A)Debit Supplies for $1,200 and credit Accounts Payable for $1,200.
B)Credit Cash for $1,200 and credit Accounts Payable for $1,200.
C)Debit Supplies for $1,200 and credit Cash for $1,200.
D)Debit Accounts Payable for $1,200 and credit Cash for $1,200.
E)Debit Equipment for $1,200 and credit Cash for $1,200.

Accepted Answer

Since Eon Movers paid for the supplies with cash, a debit should be made to their Supplies account to reflect the increase in assets, and a credit should be made to their Cash account to reflect the decrease in assets. Therefore, the correct entry would be to debit Supplies for $1,200 and credit Cash for $1,200. Option A is incorrect because it suggests that Eon Movers owes the supplier money, which is not the case since they paid cash. Option B is incorrect because it suggests that Eon Movers did not pay for the supplies, which is not the case. Option D is incorrect for the same reason as option A. Option E is incorrect because it suggests that Eon Movers purchased equipment, not supplies.

Question 5

What is total debits on this trial balance? 
A)$291,340
B)$106,964
C)$199,152
D)$193,390
E)$203,152

Accepted Answer

To find the total debits, we need to add up all the debit balances on the trial balance. By adding up the debit balances on this trial balance, we get a total of $199,152.

Question 6

What would be the appropriate entry for the following transaction? 
Bill Co.performed $5,200 in consulting services on account.
A)Credit to Cash,debit to Accounts Receivable.
B)Debit to Service Revenue,debit to Cash.
C)Debit to Accounts Receivable,credit to Cash.
D)Debit to Service Revenue,credit to Cash.
E)Debit to Accounts Receivable,credit to Service Revenue.

Accepted Answer

The transaction involves performing services on account, which means the company will receive payment later. Therefore, Accounts Receivable is debited to reflect the amount owed to the company, and Service Revenue is credited to recognize the revenue earned.

Question 7

Which financial statements are prepared for a period of time?
A)Income statement,statement of retained earnings,balance sheet and statement of cash flows.
B)Balance sheet.
C)Income statement,statement of retained earnings,and statement of cash flows.
D)Income statement and balance sheet.
E)Statement of retained earnings and statement of cash flows.

Accepted Answer

The income statement, statement of retained earnings, and statement of cash flows are all prepared for a period of time, typically over a month, quarter, or year. The balance sheet, on the other hand, is a snapshot of a company's financial position at a specific point in time.

Question 8

On December 30,2014,Sheffield Industries paid $12,000 cash to its landlord to rent office space for the six-month period beginning January 1,2015.How would Sheffield record this transaction?
A)Debit Prepaid Insurance for $12,000 and credit Cash for $12,000.
B)Debit Cash for $12,000 and credit Prepaid Rent for $12,000.
C)Debit Cash for $12,000 and credit Rent Expense for $12,000.
D)Debit Prepaid Rent for $12,000 and credit Cash for $12,000.
E)Debit Rent Expense for $12,000 and credit Cash for $12,000.

Accepted Answer

Since Sheffield paid rent in advance for the upcoming six months, the transaction would be recorded as a prepaid rent. Therefore, the appropriate journal entry would be to debit Prepaid Rent for $12,000, since that asset is expected to be used over the next six months, and credit Cash for $12,000, since cash was paid for the rent in advance.

Question 9

Compute net income for May based on the following transactions:  May 14 Paid $1,200 for two weeks wages.
May 15 Performed $5,200 in consulting services on account.
May 17 Billed a customer $1,500 for services performed May 16.
May 20 Received $5,200 in payment for May 15 transaction.
May 22 Performed services and immediately collected $2,000.
May 31 Paid $500 for advertising in the local paper to take place in June.
A)$10,200
B)$ 5,300
C)$ 8,700
D)$13,900
E)$ 7,000

Accepted Answer

The answer of Compute net income for May based on...

Question 10

On May 1,Legal Services LLC collected $5,000 for legal services that had been provided on account.How would the company record this transaction?
A)Debit Accounts Receivable for $5,000 and Credit Legal Services Revenue for $5,000.
B)Debit Cash for $5,000 and Credit Legal Services Revenue for $5,000.
C)Debit Cash for $5,000 and Credit Accounts Receivable for $5,000.
D)Debit Accounts Receivable for $5,000 and Debit Legal Services Revenue for $5,000
E)Credit Cash for $5,000 and Debit Accounts Receivable for $5,000.

Accepted Answer

The answer of On May 1,Legal Services LLC collected $5,000...

Question 11

Jab Company pays a $10,000 installment toward principal on a long-term note payable.How would the company record this payment?
A)Debit Notes Payable for $10,000 and credit Cash for $10,000.
B)Debit Cash for $10,000 and credit Notes Payable for $10,000.
C)Debit Accounts Payable by $10,000 and credit Cash for $10,000.
D)Debit Cash for $10,000 and credit Accounts Payable for $10,000.
E)Debit Common Stock for $10,000 and credit Cash for $10,000.

Accepted Answer

The payment reduces the liability, so Notes Payable is debited, and Cash is credited to reflect the outflow of cash.

Question 12

Nancy O'Rode starts a consulting business called EducateMe.On May 1,the company paid $1,200 cash for six months of insurance coverage beginning on June 1.How would EducateMe record this transaction?
A)Debit Cash for $1,200 and credit Prepaid Insurance for $1,200.
B)Debit Cash for $1,200 and credit Insurance Expense for $1,200
C)Debit Insurance Expense for $1,200 and credit Cash for $1,200.
D)Debit Prepaid Insurance for $1,200 and credit Cash for $1,200.
E)Debit Cash for $1,200 and credit Common Stock for $1,200.

Accepted Answer

The transaction involves paying cash for future insurance coverage, which is recorded as a prepaid expense. Therefore, Prepaid Insurance is debited and Cash is credited.

Question 13

Given the trial balance amounts below,compute net income. 
A)$19,578
B)$20,528
C)$23,728
D)$49,578
E)$24,578

Accepted Answer

The answer of Given the trial balance amounts below,compute net...

Question 14

Teasdale Printing Services purchases equipment on credit for $8,000.How would Teasdale record this transaction?
A)Debit Equipment for $8,000 and credit Cash for $8,000.
B)Credit Cash for $8,000 and credit Accounts Payable for $8,000.
C)Debit Accounts Payable for $8,000 and credit Cash for $8,000.
D)Debit Equipment for $8,000 and Credit Accounts Payable for $8,000.
E)Debit Equipment for $8,000 and Credit Accounts Receivable for $8,000.

Accepted Answer

Teasdale Printing Services purchased equipment on credit, which means they did not pay cash at the time of purchase. Therefore, there should be no credit to cash. The equipment is an asset, so it should be debited for its value of $8,000. However, since the purchase was made on credit, there is a liability that needs to be recorded. The liability is the accounts payable owed to the supplier of the equipment, which should be credited for $8,000. Therefore, the correct entry is to debit Equipment for $8,000 and credit Accounts Payable for $8,000.

Question 15

King Company pays an assistant $900 who worked during the month.How would King record this payment?
A)Debit Salaries Expense for $900 and credit Accounts Payable for $900.
B)Debit Salaries Expense for $900 and credit Cash for $900.
C)Debit Accounts Payable for $900 and credit Salaries Expense for $900.
D)Debit Cash for $900 and credit Salaries Expense for $900.
E)Debit Salaries Expense for $900 and credit Common Stock for $900.

Accepted Answer

King Company would record the payment by debiting Salaries Expense to recognize the expense incurred and crediting Cash to reflect the outflow of cash for the payment.

Question 16

On September 30,Forester Inc.receives its electric bill for the month of September in the amount of $300.The accountant sets the bill aside since it is not due until October 25.How would Forester record this transaction?
A)Debit Utilities Expense for $300 and credit Cash for $300.
B)Debit Utilities Expense for $300 and credit Accounts Payable for $300.
C)Debit Accounts Payable for $300 and Debit Utilities Expense for $300.
D)Debit Accounts Payable for $300 and credit Cash for $300.
E)Debit Cash for $300 and credit Utility Expense for $300.

Accepted Answer

Forester Inc. has received its electric bill for the month of September but the payment is not due until October 25. Therefore, it should record this transaction by debiting Utilities Expense for $300 and crediting Accounts Payable for $300. This is because the company owes the amount to its utility provider and has not paid it yet. Recording it as a credit to cash or a debit to accounts payable would be incorrect since the cash has not been paid yet and the amount does not need to be immediately debited to accounts payable as it is not yet due.

Question 17

Which of the following items would appear on the balance sheet? 
A)Common stock,service revenue,retained earnings,accounts payable,and unearned revenue.
B)Cash,supplies,prepaid rent,accounts receivable,office equipment,utilities expense,and shaving equipment.
C)Common stock,cash,supplies,prepaid rent,retained earnings,accounts payable,accounts receivable,office equipment,unearned revenue,and shaving equipment.
D)Service revenue and utilities expense.
E)Service revenue,unearned revenue,and utilities expense.

Accepted Answer

The balance sheet includes assets such as cash, supplies, prepaid rent, and office equipment, as well as liabilities such as accounts payable and unearned revenue. It also includes equity accounts such as retained earnings and common stock. The other options include income statement accounts such as service revenue and expenses such as utilities expense, which do not appear on the balance sheet.

Question 18

Laurie Dexter starts a business called Camden Cleaning.Dexter invests $10,000 cash in Camden in exchange for its common stock.How would Camden record this transaction?
A)Debit Cash for $10,000 and credit Cleaning Revenue for $10,000.
B)Credit Cash for $10,000 and credit Cleaning Revenue for $10,000.
C)Debit Cash for $10,000 and credit Common Stock for $10,000.
D)Debit Cash for $10,000 and debit Common Stock for $10,000.
E)Debit Common Stock for $10,000 and credit Cash for $10,000.

Accepted Answer

When Laurie Dexter invests $10,000 cash in Camden in exchange for its common stock, Camden would record the transaction by debiting Cash for $10,000 and crediting Common Stock for $10,000. This would increase the Cash account and increase the Common Stock account (a component of Stockholders' Equity), reflecting the increase in the company's equity as a result of the investment. The other options are not appropriate because Cleaning Revenue is not affected by the investment and should not be credited, and debiting both Cash and Common Stock or crediting Cash and Cleaning Revenue would not correctly reflect the effect on the company's equity.

Question 19

Carl's Carpentry purchased $10,000 of land and a building for $40,000.The company paid $20,000 cash and signed a long-term note for the amount still owed.How would the company record this transaction?
A)Debit Land for $50,000 and credit Cash for $50,000.
B)Debit Land for $10,000,debit Building for $40,000 and credit Cash for $50,000.
C)Debit Cash for $20,000,debit Notes Payable for $30,000,credit Land for $10,000,and credit Building for $40,000.
D)Debit Land for $10,000,debit Building for $40,000 credit Cash for $20,000,and credit Notes Payable for $30,000.
E)Debit Building for $20,000 and Notes Payable for $20,000.

Accepted Answer

The company should debit Land for $10,000 and Building for $40,000 to reflect the assets acquired, credit Cash for $20,000 for the amount paid, and credit Notes Payable for $30,000 for the amount still owed.

Question 20

Which of the following items would appear on the income statement? 
A)Common stock,service revenue,retained earnings,accounts payable,and unearned revenue.
B)Cash,supplies,prepaid rent,accounts receivable,office equipment,utilities expense,and shaving equipment.
C)Common stock,cash,supplies,prepaid rent,retained earnings,accounts payable,accounts receivable,office equipment,unearned revenue,and shaving equipment.
D)Service revenue and utilities expense.
E)Service revenue,unearned revenue,and utilities expense.

Accepted Answer

Service revenue and utilities expense are both items that would typically appear on an income statement. Common stock, retained earnings, accounts payable, and other items listed in options A, C, and E are more likely to appear on a balance sheet. Items like cash, supplies, prepaid rent, and office equipment may appear on a balance sheet as well, but not necessarily on an income statement.

Quiz 2: Accounting System and Financial Statements

Latimer Company borrows $50,000 from the bank and signs a note that is due in three months.How would the company record this payment?

Grotto Company pays a vendor $900 cash as partial payment for its earlier $1,800 purchase of supplies on credit.How would Grotto record this payment?

On April 15,Landscape by Design Inc.receives cash of $2,000 in advance from a customer who will be out of the country for landscaping services to be performed during the four-month period beginning on June 1.How would Landscape by Design record this transaction?

Eon Movers purchases supplies for $1,200 cash.How would Eon record this transaction?

What is total debits on this trial balance?

What would be the appropriate entry for the following transaction? Bill Co.performed $5,200 in consulting services on account.

Which financial statements are prepared for a period of time?

On December 30,2014,Sheffield Industries paid $12,000 cash to its landlord to rent office space for the six-month period beginning January 1,2015.How would Sheffield record this transaction?

On May 1,Legal Services LLC collected $5,000 for legal services that had been provided on account.How would the company record this transaction?

Jab Company pays a $10,000 installment toward principal on a long-term note payable.How would the company record this payment?

Nancy O'Rode starts a consulting business called EducateMe.On May 1,the company paid $1,200 cash for six months of insurance coverage beginning on June 1.How would EducateMe record this transaction?

Given the trial balance amounts below,compute net income.

Teasdale Printing Services purchases equipment on credit for $8,000.How would Teasdale record this transaction?

King Company pays an assistant $900 who worked during the month.How would King record this payment?

On September 30,Forester Inc.receives its electric bill for the month of September in the amount of $300.The accountant sets the bill aside since it is not due until October 25.How would Forester record this transaction?

Which of the following items would appear on the balance sheet?

Laurie Dexter starts a business called Camden Cleaning.Dexter invests $10,000 cash in Camden in exchange for its common stock.How would Camden record this transaction?

Carl's Carpentry purchased $10,000 of land and a building for $40,000.The company paid $20,000 cash and signed a long-term note for the amount still owed.How would the company record this transaction?

Which of the following items would appear on the income statement?