ACC 210 Chapter 2 NCSU

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In a double-entry accounting system, a(n) _____ represents the left side of the account.

debit

Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?

debit to cash Credit to notes payable

Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:

debit to cash credit to notes payable

An account should have an account title, account number, a place for the date of the transaction, and two columns for

debits and credits.

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 transaction is initially recorded in the journal, and then subsequently posted to the general

ledger

Accounts receivable are assets which represent

the amounts owed by customers.

True or false: A ledger provides a chronological record of all transactions affecting the firm.

False

Shannon Corporation issues common stock for $25,000. Recording this transaction will include a

credit to common stock.

Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to

Common Stocks

Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?

Credit common stock Debit to cash

Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction?

Debit cash $3,000; credit note payable $3,000.

Which type of account is increased with a debit?

Expense

Identify the three components of retained earnings.

Expenses Dividends Revenues

Which of the following are components of calculating net income?

Expenses Revenues

Which of the following contains a list of transactions affecting each account and the account's balance?

General ledger

What is the effect of net income on retained earnings?

Increases retained earnings

Which of the following represents a common advantage of a computerized accounting system?

Journal entries are instantly posted to the ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance?

Ledger

Which of the following are stockholder equity accounts?

Retained earnings Common stock

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

account; general ledger

Accounts receivable are

assets

A journal provides a

chronological record of all transactions affecting a firm.

The two components of stockholders' equity are

common stock and retained earnings.

The two roles of financial accounting are to:

communicate information to external parties for decision making purposes. measure business activities of the company.

A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account.

debits; credits

Credits increase revenues, whereas debits increase

expenses and dividends

A(n) _____ transaction involves an exchange between the company and a separate economic entity.

external

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

false

True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.

false

Revenues cause retained earnings to

increase

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as

posting

The process of transferring information from the journal to the 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.

Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have

purchased equipment and signed a note for the purchase price

The purpose of a journal is to

record a chronological listing of every transaction for a company.

Consistent with the Blank 1 of 1 recognition principle, companies record revenue at the time goods are provided to customers.

revenue

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

True or false: An external transaction is a transaction the firm conducts with a separate economic entity.

true

What are the three components of retained earnings?

Revenues, expenses, and dividends

A debit is on the ______ side of the account.

left

The accounting equation is: Assets = _______ + Stockholders' Equity.

liabilities

The type of information included in an account includes

the account title. columns for debits and credits


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