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Exam 2: Accounting System and Financial Statements

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Question 81

True/False

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Unearned revenues are classified as liabilities.

A) True
B) False

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Question 82

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HH Consulting & Design provided $800 of consulting work and $100 of design work to the same client. It billed the client for the total amount and is expecting to collect from the customer next month. Which of the following general journal entries will HH Consulting & Design make to record this transaction?

A)
B)
C)
D)
E)

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

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Question 83

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At the end of the current year, Leer Company reported total liabilities of $300,000 and total equity of $100,000. The company's debt ratio on the last year-end was:

Identify the accounts that would normally have balances in the credit column of a business's trial balance.

Drew Castle, Inc. is an insurance appraiser. Shown below are (a) several accounts in his ledger with each account preceded by an identification number, and (b) several transactions completed by Castle. Indicate the accounts debited and credited when recording each transaction by placing the proper account identification numbers to the right of each transaction.

The right side of an account is called the debit side.

Identifying _____________ and ______________ is the starting point of financial statements.

The chronological record of each complete transaction that has occurred is called the:

A revenue account normally has a debit balance.

Jackson Consulting, Inc. had the following accounts and balances at December 31: Using the information in the table, calculate Jackson Consulting Inc.'s reported net income for the period.

_______________ is the process of transferring journal entry information from the journal to the ledger.

Smiles Entertainment had the following accounts and balances at December 31: Using the information in the table, calculate the company's reported net income for the period.

The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

An income statement reports the revenues earned less the expenses incurred by a business over a period of time.

A company's list of accounts and the identification numbers assigned to each account is called a:

Joe Jackson opened Jackson's Repairs, Inc. on March 1 of the current year. During March, the following transactions occurred and were recorded in the company's books: 1. Jackson invested $25,000 cash in the business. 2) Jackson contributed $100,000 of equipment to the corporation. 3) The company paid $2,000 cash to rent office space for the month. 4) The company received $16,000 cash for repair services provided during March. 5) The company paid $6,200 for salaries for the month. 6) The company provided $3,000 of services to customers on account. 7) The company paid cash of $500 for monthly utilities. 8) The company received $3,100 cash in advance of providing repair services to a customer. Based on this information, net income for March would be:

The debt ratio of Jackson's Shoes is 0.9 and the debt ratio of Billy's Catering is 1.0. Based on this information, an investor can conclude:

At the beginning of the current year, Trenton Company Inc.'s total assets were $248,000 and its total liabilities were $175,000. During the year, the company reported total revenues of $93,000, total expenses of $76,000 and dividends of $5,000. There were no other changes in stockholders' equity during the year and total assets at the end of the year were $260,000. Trenton Company's debt ratio at the end of the current year is:

Given each of the following errors, indicate on the table below the amount by which the trial balance will be out of balance and which trial balance column (debit or credit) will have the larger total as a result of the error. a. $100 debit to Cash was debited to the Cash account twice. b. $1,900 credit to Sales was posted as a $190 credit. c. $5,000 debit to Office Equipment was debited to Office Supplies. d. $625 debit to Prepaid Insurance was posted as a $62.50 debit. e. $520 credit to Accounts Payable was not posted.

Booth Industries has liabilities of $105 million and total assets of $350 million. Its debt ratio is 40.0%. Debt Ratio = Total Liabilities/Total Assets Debt Ratio = $105 million/$350 million = 30%