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The right side of a T-account is a(n) :


A) Debit.
B) Increase.
C) Credit.
D) Decrease.
E) Account balance.

F) C) and D)
G) A) and D)

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The steps in the accounting process focus on analyzing and recording financial transactions and events within a company. Those steps are shown below. Using the number system of 1 as the first step and 4 as the last step in the process, number the steps in the correct order in which they would occur (1 thru 4) .


A) Record relevant transactions and events in a journal,
B) Post journal information to the ledger accounts
C) Prepare and analyze the trial balance
D) Analyzing each transaction

E) None of the above
F) B) and C)

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A revenue account normally has a debit balance.

A) True
B) False

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List the four steps in recording transactions.

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1. Analyze each transaction and event fr...

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The same four basic financial statements are prepared by both U.S. GAAP and IFRS.

A) True
B) False

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Andrea Apple opened Apple Photography, Inc. on January 1 of the current year. During January, the following transactions occurred and were recorded in the company's books: 1) Andrea, the stockholder, invested $13,500 cash in the business. 2) Andrea contributed $20,000 of photography equipment to the business. 3) The company paid $2,100 cash for an insurance policy covering the next 24 months. 4) The company received $5,700 cash for services provided during January. 5) The company purchased $6,200 of office equipment on credit. 6) The company provided $2,750 of services to customers on account. 7) The company paid cash of $1,500 for monthly rent. 8) The company paid $3,100 on the office equipment purchased in transaction #5 above. 9) Paid $275 cash for January utilities. Based on this information, the balance in the stockholders' equity reported on the Balance Sheet at the end of the month would be:


A) $31,400.
B) $39,200.
C) $31,150.
D) $40,175.
E) $30,875.

F) A) and D)
G) A) and C)

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The first step in the processing of a transaction is to analyze the transaction and source documents.

A) True
B) False

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Bologna Lodging, Inc. had the following accounts and balances as of December 31:  Account Cash Accounts Receivable Salaries Expense Accounts Payable Lodging Revenue Utilities Expense Prepaid Insurance Supplies Common Stock Totals Debit  Credit $20,0002,000500$4,0007,0005001,4001,50014,900$25,900‾$25,900‾\begin{array}{c}\begin{array}{|l}\hline \text { Account}\\\hline \text { Cash}\\\hline \text { Accounts Receivable}\\\hline \text { Salaries Expense}\\\hline \text { Accounts Payable}\\\hline \text { Lodging Revenue}\\\hline \text { Utilities Expense}\\\hline \text { Prepaid Insurance}\\\hline \text { Supplies}\\\hline \text { Common Stock}\\\hline \text { Totals}\\\hline\end{array}\begin{array}{|r|r|}\hline{\text { Debit }} & \text { Credit } \\\hline \$ 20,000 & \\\hline 2,000 & \\\hline 500 & \\\hline & \$ 4,000 \\\hline & 7,000 \\\hline 500 & \\\hline 1,400 & \\\hline 1,500 & \\\hline & 14,900 \\\hline\underline{ \$ 25,900 }&\underline{ \$ 25,900} \\\hline \end{array}\end{array} Using the information in the table, calculate the total assets reported on Bologna's balance sheet for the period.


A) $ 24,900
B) $ 25,400.
C) $ 22,500.
D) $ 25,900.
E) $ 23,400

F) A) and D)
G) A) and C)

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Transactions are recorded first in the ledger and then transferred to the journal.

A) True
B) False

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Jarrod Automotive, Inc. owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow: Jarrod Automotive, Inc. owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow: Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction. Jarrod Automotive, Inc. owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow: Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction. Jarrod Automotive, Inc. owned and operated by Jarrod Johnson, began business in September of the current year. Jarrod, a mechanic, had no experience with recording business transactions. As a result, Jarrod entered all of September's transactions directly into the ledger accounts. When he tried to locate a particular entry he found it confusing and time consuming. He has hired you to improve his accounting procedures. The accounts in his General Ledger follow: Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction. Prepare the general journal entries, in chronological order (a) through (e), from the T-account entries shown. Include a brief description of the probable nature of each transaction.

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The journal is known as a book of original entry.

A) True
B) False

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Asset accounts normally have debit balances and revenue accounts normally have credit balances.

A) True
B) False

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A balanced trial balance is proof that no errors were made in journalizing transactions, posting to the ledger, and preparing the trial balance.

A) True
B) False

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A company that finances a relatively large portion of its assets with liabilities is said to have a high degree of financial leverage.

A) True
B) False

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Explain debits and credits and their role in the accounting system of a business.

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Debit refers to the left side of an acco...

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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.

F) A) and B)
G) A) and C)

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The balance sheet reports the financial position of a company at a point in time.

A) True
B) False

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The debt ratio of Jackson's Shoes is .9 and the debt ratio of Billy's Catering is 1.0. Based on this information, an investor can conclude:


A) Billy's Catering finances a relatively lower portion of its assets with liabilities than Jackson's Shoes.
B) Billy's Catering has a lower risk from its financial leverage.
C) Jackson's Shoes has a higher risk from its financial leverage.
D) Billy's Catering has the exact same dollar amount of total liabilities and total assets.
E) Jackson's Shoes has less equity per dollar of assets than Billy's Catering.

F) A) and D)
G) A) and E)

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A business uses a credit to record:


A) An increase in an expense account.
B) A decrease in an asset account.
C) A decrease in an unearned revenue account.
D) A decrease in a revenue account.
E) A decrease in an equity account.

F) D) and E)
G) C) and E)

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Gi Gi's Dance Studio provided $150 of dance instruction and rented out its dance studio to the same client for another $100. The client paid immediately. Identify the general journal entry below that Gi Gi's will make to record the transaction.


A)  Rental Revenue 100 Instruction Revenue 150 Cash 250\begin{array} { | c | r | r | } \hline \text { Rental Revenue } & 100 & \\\hline \text { Instruction Revenue } & 150 & \\\hline \text { Cash } & & 250 \\\hline\end{array}
B)  Accounits Payable 250 Rental Revenue 100 Instruction Revenue 150\begin{array} { | c | r | r | } \hline \text { Accounits Payable } & 250 & \\\hline \text { Rental Revenue } & & 100 \\\hline \text { Instruction Revenue } & & 150 \\\hline\end{array}
C)  Cash 250 Rental Revenue 100 Instruction Revenue 150\begin{array} { | c | r | r | } \hline \text { Cash } & 250 & \\\hline \text { Rental Revenue } & & 100 \\\hline \text { Instruction Revenue } & & 150 \\\hline\end{array}

D)  Accounts Receivable 250 Rental Revenue 100 Instruction Revenue 150\begin{array} { | c | r | r | } \hline \text { Accounts Receivable } & 250 & \\\hline \text { Rental Revenue } & & 100 \\\hline \text { Instruction Revenue } & & 150 \\\hline\end{array}
E)  Unearned Revenue 250 Rental Revenue 100 Instruction Revenue 150\begin{array} { | c | r | r | } \hline \text { Unearned Revenue } & 250 & \\\hline \text { Rental Revenue } & & 100 \\\hline \text { Instruction Revenue } & & 150 \\\hline\end{array}

F) All of the above
G) B) and E)

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