WIN Ballada 2_|_ Basic Financial Accounting and Reporting 2022 Edition by clei NAME: ‘SCORE: SECTION: PROFESSOR: True or False 1. A trial balance with equal debit and credit totals proves that all transactions hay, been correctly journalized and posted to the proper ledger accounts. 2. Double posting of a transaction causes the debits and credits not to balance. 3. The sequence of the account titles in a trial balance depends upon the size of the account balances. 4. An expense may be recognized and recorded although no cash outlay has been made. 5. A journal entry may include debits to more than one account and credits to more than one account, but the total of the debits must always equal the total of the credits. 6. The double-entry system means that transactions are recorded both in the journal and in the ledger. 7. The accounting cycle begins with the recording of the transactions and ends with the preparation of the financial statements. 8. Debit means decrease and credit means increase. 9. The T-account is sometimes called the book of original entry. 10. In some transactions, the accounting equation may not be maintained. 11. Income statement accounts are also known as temporary accounts. 12. Amounts entered on the left side of an account, regardless of the account title, 2 called credits or charges to the account. 13. The chart of accounts is a system of organizing and numbering the accounts in t® general ledger. 14. Notes receivable are claims against debtors evidenced by a written promise to PY? certain sum of money at a definite time to the order of a specified person of" bearer.15. 16. 17. 18. 19. 20. a. 22. 23, 24, 25. 26, 27 Recording Business Transactions | 3-23 Atrial balance may balance but may not be correct. A transposition error means a posting of a journal entry to the wrong ledger account. The normal balance of any account refers to the side of the account—debit or credit—where decreases are recorded. A recording error caused by the erroneous rearrangement of digits, such as writing P627 as P672, is called a transposition. The process of recording a transaction in a journal is called journalizing. The journal is used to classify and summarize transactions, and to prepare data for basic financial statements. Transactions are analyzed on the basis of source documents. Every business transaction affects a minimum of two accounts. Acredit entry to an expense account will increase it. Normally, income accounts have debit balances. An account titled Unearned Revenues is a liability account. A group of accounts in a ledger is called a chart of accounts. A listing of the accounts in a ledger is called a chart of accounts.NAME: SCORE: ~ SECTION: PROFESSOR: Muttiple Choice 1. Which of the following steps in the accounting cycle are listed in a logical order? a. Post the closing entries, take a post-closing trial balance, and journalize the closing entries. b, Post the journal entries to the general ledger accounts, and then take a trial balance. c. Take a trial balance, prepare a worksheet, then prepare financial statements. d. Prepare the income statement, prepare the balance sheet and then prepare a trial balance. prepare a worksheet, The debit and credit analysis of a transaction normally takes place a, before an entry is recorded in a journal. b. when the entry is posted to the ledger. c. when the trial balance is prepared. d, at some other point in the accounting cycle. Asale on account would be recorded by © a. debiting revenue. b. crediting assets. c. crediting liabilities. d. debiting assets. incurring an expense for advertising on account would be recorded by a, debiting liabilities. b. crediting assets. cc. debiting an expense. 4. debiting assets. Atrial balance ‘a. proves that debits and credits are equal in the ledger. b,_ supplies a listing of open accounts and their balances that are used in preparing financial statements. cc. Is normally prepared three times in the accounting cycle, d, _allof these.Recording Business Transactions | 3-25 6. First statement: A ledger is where the entity initially records transactions and selected other events. Second statement: Nominal (temporary) accounts are income and expense accounts and are periodically closed. a. True, True c. False, True b. True, False d. False, False 7. First statement: The withdrawals account is considered a real account. Second statement: The "book of original entry" is also known as the journal. a. True, True c. False, True b. True, False d. False, False 8 First statement: The first step in the accounting cycle is the journalizing of transactions and selected other events. Second statement: Basic steps in the recording process include transferring the journal information to the appropriate account in the statement of financial position. . c. False, True a. True, True d. False, False b, True, False 9. First statement: The trial balance uncovers any errors in journalizing and posting prior to preparation of the statement of financial position. Second statement: The trial balance is'a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position. c. False, True a. True, True d. False, False b. True, False 10. First statement: One purpose of a trial balance is to prove that debits and credits of an equal amount are in the general ledger. Secand statement: A general journal chronologically ists transactions and other events, expressed in terms of debits and credits to accounts. at a c. False, True Tue, True a. Fois, Faise ». True, False— Recording Business Transactions | 3-39 [NAME: SCORE: [ SECTION: PROFESSOR: Problem #1. Debits and Credits Innovative Designs, owned by Leopoldo Medina, has been operating for two years. Below is a series of transactions. For each transaction, indicate the accounts that should be debited and credited. ‘If no journal entry is required, write “n/a” in the columns. Use the following account titles: Cash; Accounts Receivable; Supplies; Prepaid Expenses; Equipment; Patents; Accounts Payable; Notes Payable; Salaries Payable; Medina, Capital; Medina, Withdrawals; Service Revenues and Operating Expenses. Transactions Debit Credit a. Purchased equipment for use in the business; paid one- third cash and gave a note payable for the balance. Paid cash for salaries. Collected cash for services performed this period. Collected cash for services performed last period. Performed services this period on credit. Paid operating expenses incurred this period. Paid cash for operating expenses incurred last period. Incurred operating expenses this period to be paid next period. Purchased supplies for inventory to be used later; paid cash. j. Used some of the supplies from inventory for operations. Ne k. Purchased a patent (an intangible): paid cash. |. Made a payment on the equipment note in (a); the payment was part principal and part interest expense. ™. Collected cash on accounts receivable for services previously performed. _ 7. Paid cash on accounts payable for expenses previously =e [>]p fale |e incurred. : ©. On the last day of current period, paid cash for an insurance policy covering the next twelve months.Problem #2 Complete the following table by stating the accounting element of each account, and whether increases and decreases in the accounts are represented by a debit or credit entry. For example: Accounts Element Increase Decrease Supplies Asset Debit Credit Service Revenues Withdrawal Utilities Expense Rent Expense Cash in Bank Trade Payables rpeaoge rR se Salaries Expense” Office Equipment Fixtures and Fittings Interest Expense Loans Payable Capital Accounts Element, Increase Decrease Service Revenues Withdrawals Utilities Expense Rent Expense Cash in Bank Trade Payables Salaries Expense Office Equipment = |=] [>] Ja]e [el Fixtures and Fittings Interest Expense k. Loans Payable \ CapitalProblem #3 T-Account Analysis The ten accounts that follow summarize the first week's transactions of the Kasan Usop Airport Taxi: Cash 11 Usop, Capital a1 {a) 140,000] 100,000 (b) 140,000 (a) fe) 10,000} 2,000 (a) 3,000 (f) 5,000 (e) thdrawals 32 1,000 (h) (h) 20,000 (i) 3,000 (i) Fees income 41 10,000 (e) Supplies 2 Salaries Expense 51 (¢) 2,000 cu) 3,000 Service Vehicle 3 Rent Expense 52 {b) 100,000 (e) 5,000 (0 60,000 Accounts Payable a Gasoline Expense 53 ) 20,000 | 60,000 ¢) i) 3,000 Required: Determine whether the account debited or credited has increased or decreased.Problem #6 a Recording Transactions in T-Accounts and Preparing a Trial Balance John Karlo Dalangin, a dentist, established Dalangin Clinic. The following transactions occurred during June of this year: Dalangin deposited P280,000 in a bank account in the name of the business, Bought a 3-in-1 office equipment from Pitular Equipment for P4,950, paying P1,000 in cash and the balance on account. Bought waiting room chairs and a table, paying cash, P12,300. Bought office intercom on account from NE Office Supply, P2,750. Received and paid the telephone bill, P1,080. Performed professional services on account, P12,940. Received and paid the electric bill, P1,850. Received and paid the bill for the Regional Dental Convention, P3,500. Performed professional services for cash, 17,650. Partially settled accounts with NE Office Supply, P1,000, Paid rent for the month, P8,400. Paid salaries of the part-time receptionist, P3,500. ._ Dalangin withdrew cash for personal use, P8,500, Received P5,500 on account from patients who were previously billed. ld PRCRT ST sa mp ae Required: 1. Establish the following T-accounts: Cash; Account Office Furniture; Accounts Payable; Dalangin, Professional Fees; Salaries Expense; Miscellaneous Expense. ts Receivable; Office Equipment Capital; Dalangin, withdrawals: Rent Expense; Utilities Expense até 2. Record the transactions directly into the T-accoun Its usin, identify each transaction. ig the alphabets to ide’ » Prepare a trial balance.