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Exam 2: Analyzing Transactions

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Question 1

True/False

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The double-entry accounting system records each transaction twice.

A) True
B) False

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Question 2

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The process of transferring the debits and credits from the journal entries to the accounts is called

A) sliding
B) transposing
C) journalizing
D) posting

E) C) and D)
F) A) and B)

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Question 3

True/False

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Assets are increased with debits and decreased with credits.

The normal balance of an expense account is a credit.

The right-hand side of a T account is known as a debit and the left-hand side is known as a credit.

The debit side of an account

In which of the following types of accounts are increases recorded by credits?

Increases and decreases in various types of accounts are listed below. In each case, indicate by "Dr." or "Cr." (a) whether the change in the account would be recorded as a debit or a credit and (b) whether the normal balance of the account is a debit or a credit.

Which of the following entries records the payment of insurance for the current month?

Gently Laser Clinic purchased laser equipment for $8,500 and paid $2,250 down, with the remainder to be paid later. The correct entry would be

Several types of errors can be made during the journalizing and posting process. Match the following with their best description. -Column incorrectly added

On October 30, Damien Lawson withdraws $3,330 from JumpStart for personal use. Journalize this event.

The cash account will always be debited.

Which of the following is not a correct rule of debits and credits?

When a transposition error is made on the trial balance, the difference between the debit and credit totals on the trial balance will be

A cash payment is recorded in the cash account as

The chart of accounts for Corning Company includes the following: $\begin{array} { | l | c | } \hline{ \text { Account Name } } & \text { Account Number } \\\hline \text { Cash } & 11 \\\hline \text { Accounts Receivable } & 13 \\\hline \text { Prepaid Insurance } & 15 \\\hline \text { Accounts Payable } & 21 \\\hline \text { Unearned Revenue } & 24 \\\hline \text { Corning Capital } & 31 \\\hline \text { Corning Drawing } & 32 \\\hline \text { Fees Earned } & 41 \\\hline \text { Salaries Expense } & 54 \\\hline \text { Rent Expense } & 56 \\\hline\end{array}$ ? Page 3 of the journal contains the following entry: Prepaid Insurance........1,530 Cash.............................1,530 -The chart of accounts for Miguel Company includes the following:? $\begin{array} { | l | c | } \hline{ \text { Account Name } } & \text { Account Number } \\\hline \text { Cash } & 11 \\\hline \text { Accounts Receivable } & 13 \\\hline \text { Prepaid Insurance } & 15 \\\hline \text { Accounts Payable } & 21 \\\hline \text { Unearned Revenue } & 24 \\\hline \text { Miguel, Capital } & 31 \\\hline \text { Miguel, Drawing } & 32 \\\hline \text { Fees Earned } & 41 \\\hline \text { Salaries Expense } & 54 \\\hline \text { Rent Expense } & 56 \\\hline\end{array}$ Page 5 of the journal contains the following transaction:? $\begin{array} { | c | r | r | } \hline \text { Sal aries Expense } & 525 & \\\hline \text { Cash } & & 525 \\\hline\end{array}$ What is the posting reference that will be found in the salaries expense account?

State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries when recording business transactions during the month. Also, indicate the normal balance of each account. 1.Fees Earned 4.Supplies 2.Utilities Expense 5.Cash 3.Accounts Payable 6.Accounts Receivable

The recording of cash receipts to the cash account will be done by debiting the account.

Which are the parts of the T account?