Question 1

On July 7 2016 Rancho Realty Co. performed cash services of $1900. The entry to record this transaction would include

Accepted Answer

When a company performs services for cash, it increases its Cash account (an asset) through a debit and increases its Service Revenue (an income account) through a credit. The correct entry is a debit to Cash.

Question 2

When two accounts are required in one journal entry the entry is referred to as a

Accepted Answer

A simple entry involves only two accounts: one debit and one credit.

Question 3

At September 1 2016 Hotel Suites Co. reported owner's capital of $147000. During the month Hotel Suites generated revenues of $48000 incurred expenses of $26000 purchased equipment for $5000 and withdrew cash of $3000. What is the amount of owner's capital at September 30 2016?

Accepted Answer

The owner's capital at the end of the month is calculated by adding the net income (revenues minus expenses) and subtracting withdrawals from the initial owner's capital. Net income is $48000 - $26000 = $22000. The change in owner's capital is $22000 - $3000 = $19000. Therefore, the owner's capital at September 30, 2016, is $147000 + $19000 = $166000.

Question 4

In recording business transactions evidence that an accounting transaction has taken place is obtained from

Accepted Answer

Business documents such as invoices, receipts, contracts, and bank statements provide evidence that a transaction has occurred and they are used as a source document in recording the transaction in the accounting system. The Internal Revenue Service (IRS), public relations department, and the SEC (Securities and Exchange Commission) are not sources of evidence for accounting transactions.

Question 5

After a business transaction has been analyzed and entered in the book of original entry the next step in the recording process is to transfer the information to

Accepted Answer

The information from the book of original entry needs to be transferred to the ledger accounts in order to keep track of the individual accounts and balances. This allows for the preparation of accurate financial statements and analysis of the company's financial performance. Transferring the information to the bank or owner's equity accounts would not be the next step in the recording process.

Question 6

At October 1 2016 Medina Co. had an accounts payable balance of $50000. During the month the company made purchases on account of $35000 and made payments on account of $48000. At October 31 2016 the accounts payable balance is

Accepted Answer

The accounts payable balance at the end of October can be calculated by starting with the initial balance ($50,000), adding purchases made on account ($35,000), and subtracting payments made ($48,000). This results in a new balance of $37,000 ($50,000 + $35,000 - $48,000).

Question 7

At January 31 2016 the balance in Bigelow Inc.'s supplies account was $780. During February Bigelow purchased supplies of $900 and used supplies of $1150. At the end of February the balance in the supplies account should be

Accepted Answer

The balance starts at $780, and with an additional purchase of $900, the total becomes $1680. After using $1150 of supplies, the remaining balance is $530 ($1680 - $1150 = $530), which is a debit balance because supplies are an asset account.

Question 8

When three or more accounts are required in one journal entry the entry is referred to as a

Accepted Answer

When three or more accounts are required in one journal entry the entry is referred to as a compound entry. This is because it involves multiple parts and affects multiple accounts. Triple entry and multiple entry are not commonly used terms in accounting. Simple entry involves only two accounts.

Question 9

The first step in the recording process is to

Accepted Answer

Before any information can be recorded, it must be analyzed in terms of its impact on the accounts. This involves determining which accounts will be affected by the transaction, and whether the transaction will increase or decrease the balance in each account. Once this analysis is complete, the information can then be recorded in a journal. Preparation of financial statements and trial balance comes much later in the recording process.

Question 10

After transaction information has been recorded in the journal it is transferred to the

Accepted Answer

The ledger is the book where all transaction information is summarized and stored by account. It provides the basis for preparing financial statements and is the next step after recording transactions in the journal. The trial balance is a list of all accounts and their balances, not where transaction information is stored. The income statement is a financial statement that summarizes the company's revenues and expenses over a period of time, not where transaction information is stored. The book of original entry is another name for the journal where transaction information is initially recorded.

Question 11

During 2016 its first year of operations Aida's Bakery had revenues of $65000 and expenses of $35000. The business had owner's drawings of $22000. What is the amount of owner's equity at December 31 2016?

Accepted Answer

Owner's equity is calculated as: Beginning Equity + Net Income - Drawings. Since it's the first year, beginning equity is $0. Net Income = Revenues - Expenses = $65000 - $35000 = $30000. Owner's Equity = $0 + $30000 - $22000 = $8000 credit.

Question 12

The final step in the recording process is to transfer the journal information to the

Accepted Answer

The ledger is where all of the journal information is organized by account, so transferring the information from the journal to the ledger is the final step in the recording process. The trial balance is a summary of all account balances used to prepare financial statements, and the financial statements themselves are created using the information in the ledger. File cabinets may be used to physically store the documents, but are not directly involved in the recording process.

Question 13

At December 1 2016 Dubois Company's accounts receivable balance was $1300. During December Dubois had credit sales of $7400 and collected accounts receivable of $6000. At December 31 2016 the accounts receivable balance is

Accepted Answer

To find the accounts receivable balance at December 31, we need to calculate the net change in accounts receivable during December.

Beginning balance (December 1): $1300 
Credit sales during December: $7400 
Collections during December: -$6000

To calculate the net change, we need to add the credit sales and subtract the collections:

$1300 + $7400 - $6000 = $2700

Since the collections were less than the credit sales, the accounts receivable balance increased by $2700 during December. And since the balance is a debit balance (representing money owed to the company), the answer is B) $2700 debit.

Question 14

The recording process occurs

Accepted Answer

The recording process occurs repeatedly during the accounting period, which could be daily, weekly, or monthly depending on the business's needs. In a manual accounting system, the process may take longer, but it still occurs on a regular basis.

Question 15

A journal provides

Accepted Answer

A journal is a chronological record of transactions, meaning it records the transactions in the order they occur. This allows for easy tracking of the business's financial activities over time. The other options listed, such as balances for each account or a list of all accounts used, are typically found in other financial documents such as the general ledger or chart of accounts. B is also incorrect as a well-kept journal will provide all necessary information about a transaction in one place, rather than scattered throughout multiple documents.

Question 16

Evidence that would not help with determining the effects of a transaction on the accounts would be a(n)

Accepted Answer

An advertising brochure is not a financial document and does not provide any information on the effects of a transaction on the accounts. The other options, such as a cash register sales tape, bill, and check, are financial documents that would provide information on how the transaction affects the accounts.

Question 17

The final step in the recording process is to

Accepted Answer

The final step in the recording process is to transfer journal information to ledger accounts. This is where the information is organized and stored for future use in financial statements and other reports. The other options (analyzing each transaction, entering the transaction in a journal, preparing a trial balance) are important steps in the recording process, but they occur before the final step of transferring journal information to ledger accounts.

Question 18

The usual sequence of steps in the recording process is to analyze each transaction enter the transaction in the

Accepted Answer

The correct sequence in the recording process is to first analyze each transaction, then enter the transaction in the journal (also known as the book of original entry), and finally transfer the information to the ledger accounts. The ledger accounts compile all transactions related to a specific account in one place.

Question 19

The usual sequence of steps in the transaction recording process is: a. journal $\rightarrow$ analyze $\rightarrow$ ledger
b. analyze $\rightarrow$ journal $\rightarrow$ ledger.
c. journal $\rightarrow$ ledger $\rightarrow$ analyze.
d. ledger $\rightarrow$ journal $\rightarrow$ analyze.

Accepted Answer

The answer of The usual sequence of steps in the...

Question 20

A compound journal entry involves

Accepted Answer

A compound journal entry involves three or more accounts. It is used when there are multiple accounts that need to be debited or credited in a single entry.

Quiz 2: The Recording Process