Chapter 2 accounting questions

Gunner Company purchased a piece of equipment costing $6,000. She paid $1,000 immediately and put the rest on account. Show how to record this transaction to the T-accounts.

$6,000 on left side of the Equipment account; $5,000 on the right side of the Accounts payable account; $1,000 on the right side of the Cash account.

Which of the following statements is accurate regarding the Building account?

A Building asset account is used to record the costs of purchasing a store, office, warehouse or factory.

Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions.

Which of the following statements is (are) correct regarding the definition of a liability?

A liability is a debt owed by the business. A liability is a claim by creditors against the assets of a business. A liability can be settled by transferring assets or providing products or services to others.

Which of the following statements explains what a trial balance is?

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

Identify which of the following lists include only examples of assets.

Building, Cash, Accounts receivable

Which of the following statements is (are) accurate regarding equipment purchased within a business?

Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed through the Accumulated Depreciation account. Equipment is an asset. Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation.

Which of the following statements is (are) accurate regarding equipment purchased within a business?

Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation. Equipment is an asset. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense.

Which set of accounts below would have a normal debit balance?

Expenses; Dividends; Cash

journal

It is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred

General Ledger

It is a collection of all accounts with their activity and balances that exist in a business.

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

chart of accounts

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

trial balance

It is a list of each account and its balance at any given time and is used to verify that debits = credits

Which of the following statements correctly explains how to prepare a trial balance?

List each account title and its amount from the ledger. Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances.

defines prepaid accounts.

Prepaid accounts are assets that represent prepayments of future expenses.

Which of the following statements is correct about prepaid expenses?

Prepaid expenses are also called prepaid accounts and are considered assets.

Which of the following statements is accurate about the Land account?

The Land account is an asset. The Land account is increased on the left side of its T-account. The Land account is used to record the costs of land purchased by the business.

Which of the following statements is (are) correct regarding a journal?

Transactions are generally entered in chronological order. A journal is used to record business transactions. In a journal, both the debit and credit side of the transaction can be seen.

Name the accounting document or report that is completed just prior to preparing financial statements and assists in preparing the financial statements.

Trial balance

Liability Accounts

accounts payable, notes payable, accrued liabilities, unearned revenue

Notes receivable is considered a(n)

asset

asset accounts

cash, accounts receivable, notes receivable, prepaid accounts, supplies, equipment, buildings, land, inventory

Equity Accounts

common stock, dividends, revenues, expenses

Dollar signs are _____ in journals and ledgers.

not used

Choose the statement below that correctly explains a general journal.

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

Which of the following are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.)

The expired portion of prepaid accounts is reported on the income statement as an expense. Over time, the expired portion of prepaid accounts is transferred from the asset account and reported as an expense. The unexpired portion of prepaid accounts are treated as assets.

Prepaid accounts are______ that represent prepayments of future expenses and are increased with a________

assets debits

When financial statements are prepared, unexpired prepaid accounts are recorded as________________ and the expired prepaid account is reported as a ______

assets expense

Supplies are ________ until they are used. When they are used up, their costs are reported as _______

assets expenses

Brown Company provided services to a customer and immediately collected $1,900 cash. Show how to record the transaction to the T-accounts by completing the following sentence. Service Revenue would be (debited/credited) on the (left,/right) side of the T-account, and Cash would be (debited/credited) on the right(left/right) side of the T-account.

credited right debited left

Which of the following describes a general ledger?

The general ledger is a record containing all accounts used by a company.

Which of the following statements are accurate regarding supplies?

Unused supplies are treated as assets. Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. When supplies are purchased, they are added to the Supplies account. Supplies are assets until they are used.