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Exam 2: Analyzing Transactions

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Question 1

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The chart of accounts for the Corning Company includes the following: Page 5 of the journal contains the following entry: - What is the posting reference that will be found in the salaries expense account?

A) 5
B) 11
C) 54
D) 21

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

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Question 2

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For a month's transactions for a typical medium-sized business,the salary expense account is likely to have only credit entries.

A) True
B) False

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Question 3

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The chart of accounts is designed to

Even when a trial balance is in balance,there may be errors in the individual accounts.

Liability accounts are increased by debits.

Lewis Company has a condensed income statement as shown: $\begin{array}{|l|r|r|}\hline & {\text { Year 2 }} & {\text { Year 1 }} \\\hline \text { Sales } & \$ 178,400 & \$ 162,500 \\\hline \text { Wage expenses } & \$ 100,000 & \$ 92,500 \\\hline \text { Rent expenses } & 33,000 & 30,000 \\\hline \text { Utilities expenses } & 30,000 & 25,000 \\\hline \text { Total operating expenses } & \$ 163,000 & \$ 147,500 \\\hline \text { Net income } & \$ 15,400 & \$ 15,000 \\\hline\end{array}$ REQUIRED: Prepare a horizontal analysis of Lewis Company's income statements.Comment on the trends,both favorable and unfavorable.

Proof that the dollar amount of the debits equals the dollar amount of the credits in the ledger means

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

Which of the following abbreviations is correct?

A transaction that is recorded in the journal is called a journal entry.

Stockholders' equity will be reduced by the amount in the dividends account.

On November 30,the company accountant discovers that $550 of a transaction recording the purchase of office supplies was really office equipment.Prepare the journal entry to correct this situation.

Which group of accounts is comprised of only assets?

Calculate the following: a Determine the cash receipts for April based on the following data: $\begin{array}{llcc} \text {Cash payments during April } & \$ 63,000 \\ \text {Cash account balance, April 1 } & 25,500 \\ \text {Cash account balance, April 30 } & 31,750 \\\end{array}$ b Determine the cash received from customers on account during April based on the following data:

A debit is abbreviated as Db.and a credit is abbreviated as Cr.

If the trial balance is in balance,it can be assumed that all journal entries were posted correctly and no errors were made.

Revenue accounts are increased by credits.

All of the following accounts are increased with a debit except

Journalize the entries to correct the following errors: a A purchase of supplies for $500 on account was recorded and posted as a debit to Supplies for $200 and as a credit to Accounts Receivable for $200. b A receipt of $2,500 from Fees Earned was recorded and posted as a debit to Fees Earned for $2,500 and a credit to Cash for $2,500.

When an account payable is paid with cash,the stockholders' equity in the business decreases.