Financial Accounting Deeds C. 2 Smartbook
Lassiter Industries purchased equipment for $140,000. Lassiter expects to use the equipment over the next 10 years. Recording this transaction would include a
debit to equipment expense $140,000.
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits
What is the effect of net income on retained earnings?
increases
Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:
issued shares to stockholders
A chronological record of all economic events affecting a firm are recorded in a(n)
journal
What effect does revenue have on retained earnings?
increases
Computerized system
Journal entries are instantly posted to the general ledger
Which of the following represents a common advantage of a computerized accounting system?
Journal entries are instantly posted to the ledger
Manual system
Journal entries are posted periodically to the 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.
account; general ledger
When a company performs services for a customer, and the customer agrees to pay for the services at a later date, the transaction is recorded in which account?
accounts receivable
A journal provides a
chronological record of all transactions affecting a firm.
Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to
common stock
The two components of stockholders' equity are
common stock and retained earnings
A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account.
debits; credits
Dividends paid to stockholders will cause retained earnings to
decrease
What is the effect of dividends on retained earnings?
decrease
What is the effect of expenses on retained earnings?
decrease
Credits increase revenues, whereas debits increase
expenses and dividends
involves an exchange between the company and a separate economic entity
external transaction
True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.
false
True or false: A ledger provides a chronological record of all transactions affecting the firm.
false, journal
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as
posting
The purpose of a general ledger is to
provide in a single location the list of transactions affecting each account and the account's balance.
Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company
provided goods or services to a customer.
companies record revenue at the time goods are provided to customers
revenue recognition principle
Identify the three components of retained earnings.
revenues, expenses, dividends
An simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a:
t account
A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)
trial balance
Which of the following includes the list of transactions affecting each individual account and the account's balance?
ledger
True or false: An external transaction is a transaction the firm conducts with a separate economic entity.
true
True or false: The accounting equation must always remain in balance.
true
rank the steps in the measurement of external transactions
PG 58
What are the three components of retained earnings?
Revenues, expenses, and dividends
a debit is on the ________ side
left
The type of information included in an account includes
the account title. columns for debits and credits.
