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Exam 2: Analyzing Transactions

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Question 71

Multiple Choice

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A credit may signify a

A) decrease in assets
B) decrease in liabilities
C) decrease in common stock
D) decrease in revenue

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

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Question 72

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

A) True
B) False

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Question 73

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All stockholders' equity accounts record increases to the accounts with credits.

Expense accounts are increased by credits.

The normal balance of revenue accounts is a credit.

Selected accounts from the ledger of Garrison Company appear below. For each account, indicate the following: a) In the first column at the right, indicate the nature of each account, using the following abbreviations: Asset - A Revenue - R Liability - L Expense - E None of the above - N b) In the second column, indicate the increase side of each account by inserting Dr. or Cr.

The normal balance of a stockholders' equity account is a debit.

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.

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

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

The balance of an account is determined by

Accounts in the ledger are usually maintained in alphabetical order.

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

Which of the following abbreviations is correct?

The Dividends account is an expense.

Match each of the following accounts with its proper account group from groups listed below. -Patents

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

In accordance with the debit and credit rules, which of the following is true?

Journalize the five transactions for Mirmax Rentals described below. August 1 Mirmax purchases two new saws on credit at $425 each. The saws are added to Mirmax's rental inventory. Payment is due in 30 days. 8 Mirmax accepts advance deposits for tool rentals of $125 that will be applied to the cash rental when the tools are returned. 15 Mirmax receives a bill from Macon Utility Company for $180. Payment is due in 30 days. 20 Customers are charged $1,250 by Mirmax for tool rentals. Payment is due from the customers in 30 days. 31 Mirmax receives $600 in payments from the customers that were billed for rentals on August 20.

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