Accounting 201 Test Prep

Chart

A ______ of accounts is a list of all accounts a company uses, not including account balances.

Source Document

A(n) ______ describes transactions entering an accounting system, such as a purchase order.

Journal

A(n) ______ has a complete record of every transaction recorded.

A business's record of the increases and decreases in a specific asset, liability, equity, revenue, or expense is known as a(n): A) Journal. B) Account. C) Chart of accounts. D) Trial balance. E) Posting.

Account

Double Entry Accounting

Double-entry accounting demands the accounting equation remain in balance. This means that for each transaction (1) at least two accounts are involved with at least one debit and one credit and (2) total amount debited must equal the total amount credited.

Dividends

Increase with Debit

The record of all accounts and their balances used by a business is called a: A) Book of original entry. B) Ledger. C) Journal. D) Balance column journal. E) General Journal.

Ledger

A double-entry accounting system is an accounting system: A) That may only be used if T-accounts are used. B) That insures that errors never occur. C) That records the effects of transactions and other events in at least two accounts with equal debits and credits. D) That records each transaction twice. E) In which each transaction affects and is recorded in two or more accounts but that could include two debits and no credits.

That records the effects of transactions and other events in at least two accounts with equal debits and credits.

General Ledger

The ______ is a record containing all accounts used by a company, including account balances.

Account

Increases and decreases in a specific asset, liability, equity, revenue, or expense are recorded in a(n) ______.

Analyzing and Processing Transactions Journalizing and Posting Transactions Four steps in processing transactions are as follows:

1. Identify transaction and source documents 2. Analyze the transaction using the accounting equation 3. Record the journal entry Post the entry (for simplicity, we use T-accounts as ledger accounts)

Process to go from transactions and events to financial statements includes:

1. Identify: transaction and event from source documents 2. Analyze: transaction and event using accounting equation 3. Record: relevant transactions and events in a journal 4. Post: journal information to ledger accounts 5. Prepare and analyze trial balance and financial statements 6. Source Documents: identify and describe transactions entering the accounting system

Preparing a Trial Balance: three steps to prepare a trial balance are as follows:

1. List each account and its amount (from the ledger) in the trial balance. 2. Compute the total of debit balances and the total of credit balances. 3. Verify (prove) total debit balances equal total credit balances.