Q: What is the formula for calculating the ending balance of an account?

$$\text{Ending Balance} = \text{Beginning Balance} + \text{Additions} - \text{Subtractions}$$

Question 1

Which of the following best describes the double-entry accounting system used in transaction analysis?

Accepted Answer

Every transaction must have an equal amount of debits and credits, affecting at least two accounts.

Question 2

Which accounts are increased with debits according to the rules of debits and credits?

Accepted Answer

Assets and Expenses

Question 3

Fun Times Happy Company purchased a machine for $50,000 cash. What is the correct journal entry for this transaction?

Accepted Answer

Debit Equipment $$50,000; Credit Cash 50$$,000

Question 4

A company had a beginning balance in Accounts Receivable of $$1,200. During the month, it sold 3$$,000 in cash and $$2,000 on credit. The final balance in Accounts Receivable was 1$$,800. How much cash was collected from customers during the month?

Use the formula: 
$$	ext{Ending Balance} = 	ext{Beginning Balance} + 	ext{Credit Sales} - 	ext{Cash Collected}$$

Accepted Answer

$$1,400$$

Question 5

Which of the following transactions would increase both an asset and equity account?

Accepted Answer

Issuing common stock for cash

Question 6

Clutch Tutoring, Inc. purchased $8,000 of supplies on account. What is the effect on the accounting equation?

Accepted Answer

Increase Assets and Increase Liabilities by $8,000

Question 7

Which of the following best describes the order of liquidity for current assets on a classified balance sheet?

Accepted Answer

Cash, Accounts Receivable, Inventory, Prepaid Expenses

Question 8

A company had a beginning balance in Retained Earnings of $$55,000. This year, it had Revenues of 40$$,000, Expenses of $$32,000, and paid Dividends of 6$$,000. What is the final balance in Retained Earnings?

Use the formula: 
$$	ext{Ending Balance} = 	ext{Beginning Balance} + (	ext{Revenues} - 	ext{Expenses}) - 	ext{Dividends}$$

Accepted Answer

$$57,000$$

Question 9

Which of the following is NOT a current liability?

Accepted Answer

Bonds Payable

Question 10

If Clutch Tutoring, Inc. received $3,500 in cash from customers on account, what is the effect on the accounting equation?

Accepted Answer

No effect on total Assets, but Cash increases and Accounts Receivable decreases by $3,500

Question 11

Which of the following best describes the purpose of a trial balance?

Accepted Answer

To list all accounts and their ending balances to ensure debits equal credits

Question 12

Based on the balance sheet for XYZ Company, what is the total amount of current assets?

Accepted Answer

$$1,860,000$$

Question 13

Which of the following transactions would decrease both an asset and a liability?

Accepted Answer

Paying off accounts payable with cash

Question 14

What is the formula for calculating the ending balance of an account?

Accepted Answer

$$	ext{Ending Balance} = 	ext{Beginning Balance} + 	ext{Additions} - 	ext{Subtractions}$$

Question 15

Which of the following is a long-term asset according to the classified balance sheet?

Accepted Answer

Land

Question 16

If a company pays wages in cash, what is the effect on the accounting equation?

Accepted Answer

Decrease Assets and Decrease Equity

Question 17

Which of the following best describes 'liquidity' in the context of a classified balance sheet?

Accepted Answer

How easily an asset can be converted into cash

Question 18

Which of the following is the correct order for presenting current assets on a classified balance sheet?

Accepted Answer

Cash, Accounts Receivable, Inventory, Prepaid Expenses

Question 19

If XYZ Company has total assets of $$6,160,000 and total liabilities of 3$$,040,000, what is the total equity?

Accepted Answer

$$3,120,000$$

Question 20

Which of the following would NOT be included in the calculation of total current liabilities?

Accepted Answer

Bonds Payable

Transaction Analysis and the Accounting Cycle: Debits, Credits, and Financial Statements

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