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Exam 2: Analyzing Transactions

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Question 31

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The Dividends account is an expense.

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Question 32

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Which of the following errors, each considered individually, would cause the trial balance totals to be unequal?

A) A transaction was not posted.
B) A payment of $67 for insurance was posted as a debit of $76 to Prepaid Insurance and a credit of $76 to Cash.
C) A payment of $4,450 to a creditor was posted as a debit of $4,500 to Accounts Payable and a credit of $450 to Cash.
D) Cash received from customers on account was posted as a debit of $720 to Cash and a credit of $720 to Accounts Payable.

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Question 33

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Which of the following is not a useful step in finding errors on the trial balance?

McNally Industries has a condensed income statement as shown. Using horizontal analysis, calculate the amount and percent change for sales. Round percentages to one decimal place.

Accounts are classified in the ledger

A credit to the cash account will increase the account.

Postings made to standard account forms show a new balance after each entry.

Set up T accounts for Cash; Accounts Receivable; Supplies; Accounts Payable; Common Stock; Dividends; Professional Fees; and Operating Expenses.(a)In the T accounts, record the following transactions of Potter Pool Services for June, identifying each entry by number: (1)Stockholders invested $12,500 cash in the business by purchasing common stock.(2)Purchased supplies on account, $6,250.(3)Paid operating expenses, $5,500.(4)Billed clients for fees, $7,440.(5)Received cash from cash clients, $4,700.(6)Paid creditors on account, $1,400.(7)Received $3,100 from clients on account.(8)Paid $1,500 cash dividends.(b)Prepare a trial balance as of June 30 for Potter Pool Services.(c)Assuming that supplies expense (which has not been recorded) amounts to $1,500 for June, determine the following: (1)Net income for the month.(2)Stockholders' equity as of June 30.​

The process of transferring the debits and credits from the journal entries to the accounts is known as posting.

Journalizing is the process of entering amounts in the ledger.

Office supplies purchased by Janer's Cleaning Service on account were returned. The office supplies had not yet been paid for. Which of the following entries for Janer's Cleaning Service records this transaction?

Which of the following errors could cause the trial balance totals to be unequal?

On January 1, Merry Walker and other stockholders established a catering service. Listed below are accounts to use for transactions (a) through (e), each identified by a number. Following this list are the transactions that occurred in Walker's first month of operation. You are to indicate for each transaction the accounts that should be debited and credited by placing the account number(s) in the appropriate box. 1.Cash 2.Accounts Receivable 3.Supplies 4.Prepaid Insurance 5.Equipment 6.Truck 7.Notes Payable 8.Accounts Payable 9.Common Stock 10.Dividends 11.Fees Earned 12.Wages Expense 13.Rent Expense 14.Utilities Expense 15.Truck Expense 16.Miscellaneous Expense 17.Insurance Expense

Prepare a journal entry for the purchase of a truck on April 4 for $85,700, paying $15,000 cash and the remainder on account. Omit explanation.

A credit balance in which of the following accounts would indicate a likely error?

On October 30, JumpStart pays $3,330 in dividends to its stockholders. Provide the journal entry for this transaction.

Liability accounts are increased by debits.

Stockholders' equity is reduced by the amount in the dividends account.

The normal balance of an expense account is a credit.

Which of the following accounts would be increased with a credit?