Accounting Chapter 2-3

journal

A chronological record of all economic events affecting a firm are recorded in a(n)

trial balance

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)

ledger

A transaction is initially recorded in the journal, and then subsequently posted to the general

account, general ledger

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

account; general ledger

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

debit, credit

Accounts on the left side of the accounting equation (assets) are increased with a(n) to the account, whereas accounts on the right side of the accounting equation are increased with a(n)

revenues

Consistent with the recognition principle, companies record revenue at the time goods are provided to customers.

expenses and dividends

Credits increase revenues, whereas debits increase

expenses, revenues, dividends

Identify the three components of retained earnings.

debit equipment, debit cash

Farmer, Inc. purchases a tractor for $80,000 cash. Recording this transaction will require which of the following?

purchased equipment and signed a note for the purchase price

Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have

debit cash, credit notes payable

Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?

increase

Revenues cause retained earnings to

posting

The process of transferring information from the journal to the ledger is referred to as

provide in a single location the list of transactions affecting each account and the account's balance.

The purpose of a general ledger is to

common stock and retained earnings

The two components of stockholders' equity are

the account title, columns for debits and credits

The type of information included in an account includes

revenues, expenses, and dividends

The types of accounts which affect retained earnings are

revenues, expenses, dividends

The types of accounts which affect retained earnings are

false

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

decrease

What is the effect of dividends on retained earnings?

decrease

What is the effect of expenses on retained earnings?

Purchasing inventory from suppliers Paying salaries to employees Borrowing money from the bank

Which of the following are external transactions?

purchasing supplies from a vendor

Which of the following is an external transaction

journal entries are instantly posted to the ledger

Which of the following represents a common advantage of a computerized accounting system?

revenue

Which type of account is increased with a credit?

expense

Which type of account is increased with a debit?