Accounting 301- COV CH 2

Why are posting references entered in the journal when entries are posted to the ledger accounts?

So we will know that the entry has been posted.

Correctly identify steps 3 and 4 of the accounting process:

Step 3: record transactions into the journal; Step 4: post entries into the ledger

On December 31, the company purchases supplies for $1,000 on credit.

Supplies 1,000 (debit) Accounts Payable 1,000 (credit)

From the following list, identify those that are likely to serve as source documents. Trial balance telephone bill Sales receipt Income statement Invoice from supplier Bank statement

Telephone bill Sales receipt Invoice from supplier Bank Statement

Indicate how to increase each of the accounts listed below Common stock professional fees revenue Dividends Salaries Expense

1. Credit 2. credit 3. debit 4. debit

Indicate how to increase each of the accounts listed below. Cash Accounts Payable Supplies Accounts Receivable

1. Debit 2. Credit 3. Debit 4. Debit

Select the correct reporting time period for each financial statement. Income statement Balance sheet Statement of Retained Earnings Statement of Cash Flows

1.Period of time 2.Point in time 3.Period of time 4.Period of time

Indicate the order the financial statements are prepared Statement of Retained Earnings Balance Sheet Income Statement

2 3 1

Carlin Company has total assets of $1,000,000, liabilities of $400,000, and equity of $600,000. What is the debt ratio (rounded to a whole percent)?

40% Explanation: The ratio is calculated as follows: $400,000/$1,000,000 = 40%.

Which of the following is a true statement about debits and credits?

A credit is on the right side of an account

On December 31, the company paid a $200 invoice that they received in November for electricity.

Accounts Payable 200 (debit) Cash 200 (credit)

On December 31, Fantastic Tea receives $3,000 cash from Don Smith, in exchange for common stock. Complete the necessary journal entry by selecting the account names from the pull-down menus and entering dollar amounts in the debit and credit columns.

Cash 3,000 (debit) Common Stock 3,000 (Credit) Explanation: This transaction increases Cash, an asset, with a debit of $3,000 and increases Common Stock, an equity account, with a credit of $3,000.

On December 31, the company provides services and receives cash of $5,000.

Cash 5,000 (debit) Services Revenue 5,000 (credit)

Which of the following statements are true about the chart of accounts?

Different companies use different charts of accounts based on individual company need. The chart of accounts should be ordered in a logical sequence based on type of account

On December 31, the company purchases equipment for $10,000 and pays for the purchase in cash.

Equipment 10,000 (debit) Cash 10,000 (credit)

Which of the following are the ways that a company can finance the purchase of assets? Equity financing cash financing debt financing supplier financing

Equity Financing and Debt Financing

The process of recording transactions in a journal is called

Journalizing

Alex invested $30,000 in cash in his business. How will this entry be posted in the ledger accounts?(You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) The $30,000 will be posted to the credit side of the cash account The $30,000 will be posted to the debit side of the Cash account The $30,000 will be posted to the debit side of the Common Stock account The $30,000 will be posted to the credit side of the Common Stock account

The $30,000 will be posted to the debit side of the Cash account The $30,000 will be posted to the credit side of the Common Stock account Explanation: Cash is an asset account and Common Stock is an equity account. Since the Common Stock investment in the business increases the cash balance, we post $30,000 in the debit column of the Cash account and post $30,000 in the credit column of the Common Stock.

Which of the following statements are true about the general ledger?

The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.

Which of the following statements is true?

The trial balance is completed to ensure that debits and credits are equal in the General Ledger.

Which of the following accounts is an asset?

prepaid advertising

On November 30, the company received an invoice from the electric company for $200. The company will pay the invoice in December.

Utilities expense 200 (debit) Accounts payable 200 (credit)

If a credit balance in Unearned Revenue (a liability account) is incorrectly listed as a credit balance in the Sales Revenue account (a revenue account), is the trial balance still in balance?

Yes

A record of the increases and decreases in a specific account is a(n):

account

Which of the following accounts is a liability?

accounts payable

Which of the following accounts is an equity?

common stock

With double-entry accounting, each transaction requires: (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) that at least three accounts are affected that the total debits equal the total debits that at least two accounts are affected that the total will equal the total credits

that at least two accounts are affected that the total debits will equal the total credits