accounting study tools

Rosewell Florist received a utility bill from Staygreen Electric Company for $325, which it paid right away. how is the entry done to Rosewell's accounts?

A debit to Utility Expense of $325

Which of the following provides the best method of measuring income for the vast majority of businesses?

Accrual basis of accounting

Blythe Company bought equipment on account. What is the correct entry to record the purchase of the asset on account?

Debit Equipment and credit Accounts Payable

an appropriate journal entry to record this transaction: Business owner Mac Cole withdrew $2,500 for personal use, which he used to buy a tractor for his home.

Debit Mac Cole, Drawing, $2,500 and credit Cash, $2,500

how is an expense account increased

It is increased with debits

What is the net effect when an asset is purchased with cash

No net effect to assets; they remain the same.

Ken Johnson owns Sunshine Dry Cleaners and has written himself a check to withdraw funds from the business for personal use. The $500 check will have what effect on Sunshine's owner's equity?

Owner's equity is decreased by $500.

which accounts have a normal credit balance

Revenues and liabilities

How does the posting of adjusting entries to the general ledger differ from all other entries?

The only exception is that "Adjusting" is written in the Item column of the general ledger.

A correcting entry is not required if

a transaction has been correctly journalized but posted incorrectly.

Businesses use a separate __________ to record the increases and decreases in each type of asset, liability, owner's equity, revenue, and expense.

account

what kind of business characteristics would result in similar measures of net income under both the accrual and cash bases of accounting?

all cash businesses

The difference between the footings on the debit and credit sides of the T account is known as the

balance

A net loss is indicated when the

balance sheet total credits exceed the balance sheet total debits.

Checks that have been written and cleared in a bank account are called canceled checks, and they provide information about

cash payments

list of accounts used by a business

chart of accounts

The purpose of producing a trial balance is to

check that the debit and credit totals are equal.

The chart of accounts of XYZ Company includes the following accounts: 101 Cash; 210 Wages Payable; 310 Owner, Capital; 401 Sales; and 602 Office Expense. Based on the selected accounts of XYZ Company, the first digit of the account number indicates

classification of the account

The right side of a T account is known as the

credit side

What is the normal balance side for an asset account?

debit side

The total dollar amounts of the debit and credit sides of a T account are known as

footings

As a business owner, you make it a practice to review the daily transactions of the business. Where would you most likely look to find that information?

general journal

A T account is most similar to the

general ledger

When the business acquires cash from the owner as an investment, the owner's capital account is

increased with a credit

what do source documents indicate

indicate that a transaction has occurred.

What is posted to the general ledger

journal entries

Depreciation is consistent with the

market value principle.

are explanations required for adjusting entries.

no

You are reviewing journal entries and see an entry that debits Accounts Payable and credits Cash. What would you expect the description to be for this entry?

paid amount due to supplier

The process of copying the dates and dollar amounts from the journal to the ledger is known as

posting

Liabilities and owner's equity are on which side of the accounting equation

right side

Liabilities and owner's equity are on which side of the accounting equation?

right side

Business transactions are recorded in the general journal using information from the

source documents and the chart of accounts.

If you have committed a transposition error, the difference between the debit and credit totals of the trial balance will result in an amount

that is evenly divisible by 9.