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Exam 15: Analyzing for Business Transactions

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Question 91

True/False

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The debt ratio helps to assess the risk a company has of failing to pay its debts and is helpful to both its owners and creditors.

A) True
B) False

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Question 92

Multiple Choice

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A business's source documents:

A) Include the ledger.
B) Provide objective evidence that a transaction has taken place.
C) Must be in electronic form.
D) Are prepared internally to ensure accuracy.
E) Include the chart of accounts.

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

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Question 93

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Explain the recording and posting processes.

The balance sheet reports the financial position of a company at a point in time.

You decrease the Accounts Payable account on the ________side of its account.

Mary Sunny began business as Sunny Law Firm on November 1. Record the following November transactions by making entries directly to the T-accounts provided. Then, prepare a trial balance, as of November 30. a) Mary invested $15,000 cash and a law library valued at $6,000 in exchange for common stock. b) Purchased $7,500 of office equipment from John Bronx on credit. c) Completed legal work for a client and received $1,500 cash in full payment. d) Paid John Bronx. $3,500 cash in partial settlement of the amount owed. e) Completed $4,000 of legal work for a client on credit. f) The firm paid $2,000 cash in dividends. g) Received $2,500 cash as partial payment for the legal work completed for the client in (e). h) Paid $2,500 cash for the legal secretary's salary.

The posting process is the link between the ________ and the ________.

A $15 credit to Sales was posted as a $150 credit. By what amount is the Sales account in error?

Source documents identify and describe transactions and events entering the accounting process.

The first step in the processing of a transaction is to analyze the transaction and source documents.

In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.

A simple tool that is widely used in accounting to represent a ledger account and to understand how debits and credits affect an account balance is called a:

BBB Company sends a $2,500 invoice to a customer for catering services it provided during the month. Set up the necessary T-accounts below and show how this transaction would be recorded directly in those accounts.

The financial statement that summarizes the changes in the retained earnings account is called the balance sheet.

Which financial statement reports an organization's financial position at a single point in time?

Identify the statement below that is correct.

Which of the following is not a step in the accounting process?

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n) :

Gi Gi's Bakery has total assets of $425 million. Its total liabilities are $110 million. Its equity is $315 million. Calculate the debt ratio.

Which of the following statements is not true: