Chapter 2 Concept Questions

After journal entries are posted, the reference column a) of the general ledger will show journal page numbers. b) of the general journal will show "Dr" or "Cr". c) of the general journal will be blank. d) of the general ledger will show account numbers.

a) of the general ledger will show journal page numbers.

A journal provides a) a list of all accounts used in the business. b) a chronological record of transactions. c) the balances for each account. d) information about a transaction in several different places.

b) a chronological record of transactions.

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to a) financial statements. b) ledger accounts. c) stockholders' equity. d) the company's bank.

b) ledger accounts.

The normal balance of any account is the a) left side. b) side which increases that account. c) right side. d) side which decreases that account.

b) side which increases that account.

Customarily, a trial balance is prepared a) only at the inception of the business. b) after each journal entry is posted. c) at the end of an accounting period. d) at the end of each day.

c) at the end of an accounting period.

Which of the following journal entries is recorded correctly and in the standard format? a) Salaries and Wages Expense 500 Cash 1,500 Advertising Expense 1,000 b) Cash 1,500 Salaries and Wages Expense 500 Advertising Expense 1,000 c) Salaries and Wages Expense 500 Advertising Expense 1,000 Cash 500 d) Salaries and Wages Payable 500 Advertising Expense 1,000 Cash 1,500

d) Salaries and Wages Payable 500 Advertising Expense 1,000 Cash 1,500

In recording business transactions, evidence that an accounting transaction has taken place is obtained from a) the SEC. b) the Internal Revenue Service. c) the public relations department. d) business documents.

d) business documents.

A chart of accounts for a business firm a) indicates the amount of profit or loss for the period. b) shows the balance of each account in the general ledger. c) is a graph. d) lists the accounts and account numbers that identify their location in the ledger.

d) lists the accounts and account numbers that identify their location in the ledger.

In recording an accounting transaction in a double-entry system a) the number of debit accounts must equal the number of credit accounts. b) there must always be entries made on both sides of the accounting equation. c) there must only be two accounts affected by any transaction. d) the amount of the debits must equal the amount of the credits.

d) the amount of the debits must equal the amount of the credits.

The left side of an account is a) the balance of the account. b) a description of the account. c) blank. d) the debit side.

d) the debit side.