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Figgaro Company's accounts and their balances, as of the end of August, are included below. All accounts have normal balances: Accounts receivable $36,000 Cash $27,000 Equipment 59,000 Advertising expense 5,000 Service revenues earned. 75,000 Accounts payable 31,000 Rent expense 3,600 Dividends 24,000 Office supplies 1,500 Salaries expense 30,000 Notes payable 22,000 Common Stock 58,100 a. Calculate net income. b. Determine the amount of total equity to be shown on the August 31 balance sheet.

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A. $75,000 Service revenues earned
(3,60...

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If Taylor Willow, the sole stockholder of Willow Hardware, uses cash of the business to purchase a family automobile, the business should record this use of cash with an entry to:


A) Debit Salary Expense and credit Cash.
B) Debit Cash and credit Salary Expense.
C) Debit Cash and credit Dividends.
D) Debit Dividends and credit Cash.
E) Debit Automobiles and credit Cash.

F) A) and E)
G) A) and B)

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Identify the account below that is classified as an asset account:


A) Unearned Revenue
B) Accounts Payable
C) Supplies
D) Common Stock
E) Service Revenue

F) B) and D)
G) B) and C)

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Able Graphics received a $400 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Able Graphics make to record this transaction?


A)  Utilities Experise 400 Cash 400\begin{array} { | l | r | r | } \hline \text { Utilities Experise } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}
B)  Cash 400 Utilities Expense 400\begin{array} { | l | r | r | } \hline \text { Cash } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}
C)  Utilities Experise 400 Accounts Payable 400\begin{array} { | l | r | r | } \hline \text { Utilities Experise } & 400 & \\\hline \text { Accounts Payable } & & 400 \\\hline\end{array}
D)  Accounts Payable 400 Utilities Expense 400\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 400 & \\\hline \text { Utilities Expense } & & 400 \\\hline\end{array}
E)  No jourial entry is required  \begin{array} { | l | r | r | } \hline \text { No jourial entry is required } & \quad\quad\quad\quad\quad& \\\hline \text { } & & \quad\quad\quad\quad\quad\\\hline\end{array}

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

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Expenses always decrease equity.

A) True
B) False

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On January 1 of the current year, Jimmy's Sandwich Company reported stockholders' equity totaling $122,500. During the current year, total revenues were $96,000 while total expenses were $85,500. Also, during the current year paid $20,000 in cash dividends. No other changes in equity occurred during the year. If, on December 31 of the current year, total assets are $196,000, the change in total stockholders' equity during the year was:


A) A decrease of $9,500.
B) An increase of $9,500.
C) An increase of $30,500.
D) A decrease of $30,500.
E) An increase of $73,500.

F) B) and D)
G) A) and D)

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An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

A) True
B) False

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A general journal is:


A) A ledger in which amounts are posted from a balance column account.
B) Not required if T-accounts are used.
C) A complete record of all transactions in chronological order from which transaction amounts are posted to the ledger accounts.
D) Not necessary in electronic accounting systems.
E) A book of final entry because financial statements are prepared from it.

F) All of the above
G) A) and D)

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A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

A) True
B) False

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In a seller's accounting records,________ are promises of payment waiting to be received from customers.

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Which of the following does not affect the equity of a business?


A) Unearned Revenue
B) Common Stock
C) Services Revenue
D) Wages Expense
E) Dividends

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

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Jarrod Automotive, 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, 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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a. Sept. 1 Cash 4,200
Equipment 800
Comm...

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The record of all accounts and their balances used by a business is called a:


A) Journal.
B) Book of original entry.
C) General Journal.
D) Balance column journal.
E) Ledger (or General Ledger) .

F) B) and D)
G) A) and B)

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All of the following statements accurately describe the debt ratio except.


A) It is of use to both internal and external users of accounting information.
B) A relatively high ratio is always desirable.
C) The dividing line for a high and low ratio varies from industry to industry.
D) Many factors such as a company's age, stability, profitability and cash flow influence the determination of what would be interpreted as a high versus a low ratio.
E) The ratio might be used to help determine if a company is capable of increasing its income by obtaining further debt.

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

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If a company provides services to a customer on credit, the company providing the service should credit Accounts Receivable.

A) True
B) False

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An account used to record stockholders' investments in a business is called a(n) :


A) Dividends account.
B) Common stock account.
C) Revenue account.
D) Expense account.
E) Liability account.

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

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Richard Redden, the sole stockholder, contributed $70,000 in cash and land worth $130,000 in exchange for common stock to open a new business, RR Consulting. Which of the following general journal entries will RR Consulting make to record this transaction?


A) Debit Assets $200,000; credit Common Stock, $200,000.
B) Debit Cash and Land, $200,000; credit Common Stock, $200,000.
C) Debit Cash $70,000; debit Land $130,000; credit Common Stock, $200,000.
D) Debit Common Stock, $200,000; credit Cash $70,000, credit Land, $130,000.
E) Debit Common Stock, $200,000; credit Assets, $200,000.

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

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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)  Desigry Reverue 100 Consulting Reverue 800 Accounts Receivable 900\begin{array} { | l | r | r | } \hline \text { Desigry Reverue } & 100 \\\hline \text { Consulting Reverue } & 800 & \\\hline \text { Accounts Receivable } & & 900 \\\hline\end{array}
B)  Accounts Payable 800 Desigri Revenue 100 Consulting Revenue 800\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 800 \\\hline \text { Desigri Revenue } & & 100 \\\hline \text { Consulting Revenue } & & 800 \\\hline\end{array}
C)  Consulting Revenue 800 Design Revenue 100 Cash 900\begin{array}{|l|r|r|}\hline \text { Consulting Revenue } & 800 & \\\hline \text { Design Revenue } & 100 & \\\hline \text { Cash } & & 900 \\\hline\end{array}
D)  Cash 900 Consulting Revenue 800 Desigra Revenue 100\begin{array} { | l | r | r | } \hline \text { Cash } & 900 \\\hline \text { Consulting Revenue } & & 800 \\\hline \text { Desigra Revenue } & & 100 \\\hline\end{array}
E)  Accounts Receivable 900 Consulting Revenue 800 Desigra Revenue 100\begin{array} { | l | r | r | } \hline \text { Accounts Receivable } & 900 \\\hline \text { Consulting Revenue } & & 800 \\\hline \text { Desigra Revenue } & & 100 \\\hline\end{array}

F) C) and D)
G) B) and D)

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Given the following errors, identify the one by itself that will cause the trial balance to be out of balance.


A) A $200 cash salary payment posted as a $200 debit to Cash and a $200 credit to Salaries Expense.
B) A $100 cash receipt from a customer in payment of her account posted as a $100 debit to Cash and a $10 credit to Accounts Receivable.
C) A $75 cash receipt from a customer in payment of her account posted as a $75 debit to Cash and a $75 credit to Cash.
D) A $50 cash purchase of office supplies posted as a $50 debit to Office Equipment and a $50 credit to Cash.
E) An $800 prepayment from a customer for services to be rendered in the future was posted as an $800 debit to Unearned Revenue and an $800 credit to Cash.

F) B) and C)
G) C) and D)

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A more structured format that is similar to a T-account in that it has columns for debits and credits, but that is different in that it has columns for transaction date, explanation, and the account balance is the ________.

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balance co...

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