Chapter 3 ACC

What does the double-entry system require?

Each transaction must be recorded in at least two different accounts.

When presented with a source document as evidence of a transaction, a company will first take which of the following steps?

Enter the transaction in a journal.

Debits increase both assets and liabilities. True or False

False

True or False: A transaction was not posted. This would cause the trial balance to be out of balance.

False

Which of the following accounts would appear nearest to the bottom of a company's trial balance?

Rent expense (or expenses in general)

The basic form of an account is called a _______

T-account

Which of the following results when a company purchases equipment for $1,800 cash?

Total assets remain unchanged.

Debits increase assets and decrease liabilities. True or False

True

Source documents can provide evidence that a transaction has occurred. True or false?

True

There is no need to open a new account every time a business enters into a transaction.

True

The classification "liability" includes

Unearned service revenue

Which of the following gives the usual sequence of steps in the transaction recording process?

analyze, journalize, post to the ledger

Typically the _______ ______ ________ begins with assets accounts?

chart or accounts

In what order are transactions in a journal initially recorded?

chronological order

Posting requires the transfer of ________ to the ledger.

every transaction in a journal

Which of the following is NOT part of an account in its simplest form?

explanation column

A company uses their trial balance to prepare their

financial statements

During posting, where is information transferred?

from the journal to ledger

Transferring the journal information to the ledger

is the final step in the recording process

Chronological order is the order in which transactions in a _________ are initially recorded.

journal

The purpose of the __________ is to keep in one place all information about changes in specific account balances.

ledger

Transactions are entered in the journal and then transferred to

ledger accounts

How is the Unearned Service Revenue account classified?

liability

Cash increases and accounts receivable decreases when a business

pays on an account payable.

Accumulating the effects of journalized transactions in the individual accounts is the main purpose of the procedure called

posting

The procedure that involves transferring journal entries to the ledger accounts is called

posting

When a company transfers journal entries to the ledger accounts, this process is called .

posting

The usual sequence of steps in ________ is analyze, journalize, post to the ledger.

recording transactions

Receipts of cash in advance from customers are not treated as revenue at the time of receipt because

revenue cannot be recognized until the work is performed.

Errors in journalizing are ________ when a company compiles its trial balance for a period.

sometimes uncovered

Evidence for a transaction comes in the form of

source documents

Stockholders' equity is not affected when

the company pays a portion of an account payable.

Which of the following represents the characteristics of every accounting information system? Select all that apply.

- It processes transaction data. - It communicates financial information to decision-makers. - It collects transaction data.

With which type of account does the chart of accounts typically begin?

Assest accounts

________ increase assets and decrease liabilities.

Debits

Which of the following are considered financing activities? Select all that apply.

- borrowing money - issuing shares of stock

The basic format of a journal includes a

- brief explanation. - account title column. - date column.

A(n) ________ is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.

account

An individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items is a(n)

account

Beacon Books issues common stock for $500,000 and uses $100,000 of the cash for building improvements. As a result,

assets will be increased by $500,000.

If a company is using the double-entry system, each transaction is required to be recorded in

at least two different accounts.

When is a trial balance customarily prepared?

at the end of an accounting period

Each time a business enters into a new transaction, it _____ to set up a new account.

does not need

All business transactions are first entered in

the journal

A __________ ____________ is an accounting record that includes a list of accounts and their balances at a given time.

trial balance