WGU D102 Financial Accounting Final OA Review Module 5 Questions and Answers

General Journal - ANSWER-where each transaction is initially recorded, in debit-and-credit language. It can be thought of as a chronological description of events. account - ANSWER-The impact of all of these events is summarized by sorting each debit and each credit, by the item affected, and copying all debits and credits impacting an item into one place, called an General Ledger - ANSWER-The collection of all of the accounts in a company's accounting system is called the A chronological record of all transactions of a business - ANSWER-What is a general journal? When recording items in the journal - ANSWER-When does an accountant perform transaction analysis? Identify which accounts are involved. For each account, determine if it is increased or decreased. For each account, determine by how much it has changed. - ANSWER-When preparing a journal entry, a systematic method may be used in analyzing every transaction. A journal entry involves a three-step process: 1. What accounts are involved? Cash, Capital Stock 2. Did the accounts increase or decrease? Cash + , Capital stock + 3. By how much did the account change? Debit Cash $2,000 Credit Capital Stock $2,000 - ANSWER-Individuals invest $2,000 cash in the business to become shareholders 1. What accounts are involved? Cash, Notes Payable 2. Did the accounts increase or decrease? Cash +, NP + 3. By how much did the account change? Debit Cash $2,000 Credit Notes Payable $2,000 - ANSWER-Borrowed $2,000 cash from a bank. 1. What accounts are involved? Cash , Truck 2. Did the accounts increase or decrease? Cash -, Truck + 3. By how much did the account change? Debit Truck $800 Credit Cash $800 - ANSWER-Buy a truck for $800 paying cash. 1. What accounts are involved? Equipment, AP 2. Did the accounts increase or decrease? Equipment +, AP + 3. By how much did the account change? Debit Equipment $250 Credit AP $250 - ANSWER-Buy equipment for $250 and agree to pay later. 1. What accounts are involved? Cash, Supplies 2. Did the accounts increase or decrease? Cash -, Supplies + 3. By how much did the account change? Debit Supplies $180 Credit Cash $180 - ANSWER-Buy supplies for $180 paying cash. 1. What accounts are involved? Cash, Inventory 2. Did the accounts increase or decrease? Cash -, Inventory + 3. By how much did the account change? Debit Inventory $150 Credit Cash $150 - ANSWER-Buy inventory for $150 paying cash. 1. What accounts are involved? Cash, AR, Revenue 2. Did the accounts increase or decrease? Cash +, AR +, Revenue + 3. By how much did the account change? Debit Cash $270 Debit AR $80 Credit Revenue $350 - ANSWER-Provide services worth $350 to a customer, collecting $270 Cash with the balance to be received in two weeks. 1. What accounts are involved? Cash, Supplies 2. Did the accounts increase or decrease? Cash -, Supplies + 3. By how much did the account change? Debit Supplies $180 Credit Cash $180 - ANSWER-Buy supplies for $180 paying cash. 1. What accounts are involved? Cash , Inventory 2. Did the accounts increase or decrease? Cash -, Inventory + 3. By how much did the account change? Debit Inventory $150 Credit Cash $150 - ANSWER-Buying inventory for $150 paying cash. 1. What accounts are involved? Cash, AR, Revenue 2. Did the accounts increase or decrease? Cash +, AR +, Revenue + 3. By how much did the account change? Debit Cash $270 Debit AR $80 Credit Revenue $350 - ANSWER-Provide services worth $350 to a customer, collecting $270 cash with the balance to be received in two weeks. 1. What accounts are involved? Cash, Inventory, Sales Revenue, COGS 2. Did the accounts increase or decrease? Cash +, Inventory -, Sales Revenue +, COGS + 3. By how much did the account change? Debit Cash $90 Debit COGS Expense $75 Credit Inventory $75 Credit Revenue $90 - ANSWER-Sold inventory to a customer for a total price of $90 cash. The original cost of the inventory was $75. 1. What accounts are involved? Cash, Service Revenue 2. Did the accounts increase or decrease? Cash +, Service Revenue + 3. By how much did the account change? Debit Cash $45 Credit Service Revenue $45 - ANSWER-Provide services worth $45 to a customer, collecting the entire amount immediately. 1. What accounts are involved? Cash, Gas expense, Wages expense 2. Did the accounts increase or decrease? Cash-, Gas expense +, Wage expense + 3. By how much did the account change? Debit Gas expense $50 Debit Wages expense $60 Credit cash $110 - ANSWER-Paid $50 cash for gasoline expenses and $60 cash for wages. 1. What accounts are involved? Cash, AR 2. Did the accounts increase or decrease? Cash +, AR - 3. By how much did the account change? Debit Cash $80 Credit AR $80 - ANSWER-Collected $80 cash from customers who bought on credit last month 1. What accounts are involved? Cash, AP 2. Did the accounts increase or decrease? Cash -, AP - 3. By how much did the account change? Debit Accounts Payable $250 Credit Cash $250 - ANSWER-Paid $250 in cash a s payment on account for a previously recorded purchase 1. What accounts are involved? Cash, interest expense, Note Payable 2. Did the accounts increase or decrease? Cash -, Interest Expense +, Notes Payable - 3. By how much did the account change? Debit Interest Expense $20 Debit Notes Payable $158 Credit Cash $178 - ANSWER-Made the first monthly cash payment (in the amount of $178) on the loan of $2,000 with a 12% annual interest 1. What accounts are involved? Cash, Dividends 2. Did the accounts increase or decrease? Cash -, Dividends + 3. By how much did the account change? Debit Dividends $50 Credit Cash $50 - ANSWER-Declared and paid cash dividends of $50 Trial Balance - ANSWER-a listing of all account balances provides a means of testing whether total debits equal total credits for all accounts. (Internal only) Trial balance - ANSWER-Strictly an internal document used to summarize all of the account balances (assets, Liabilities, owners equity, revenues, expenses, and dividends) in a companys accounting system chart of accounts - ANSWER-A particular company will have as many (or as few) accounts as it needs to provide a reasonable classification of its transactions. The list of accounts used by a company is known as its 1. Assets 2. Liabilities 3. Owners' Equity accounts of Capital Stock (also called Paid-in Capital) and Retained Earnings 4. Revenues 5. Expenses - ANSWER-In a chart of accounts, the standard sequence is as follows: