Accounting Chater 2
Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to
Common Stock
True or false: A ledger provides a chronological record of all transactions affecting the firm.
False
True or false: The term debit means increase, and the term credit means decrease.
False
Which of the following represents a common advantage of a computerized accounting system?
Journal entries are instantly posted to the ledger
A transaction is initially recorded in the general _____ and then subsequently posted to the general _________
Journal, 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 external transactions?
Purchasing inventory from suppliers, Borrowing money from the bank, Paying salaries to employees
A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.
account; general ledger
The two components of stockholders' equity are
common stock and retained earnings
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits.
Credits increase revenues, whereas debits increase
expenses and dividends.
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.
The purpose of a journal is to
record a chronological listing of every transaction for a company
The type of information included in an account includes
the account title and columns for debit and credit
The term debit means to place the entry on the ________ hand side of the account, and the term credit means to place the entry on the ________ hand side of the account.
Left, Right
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as ________
Posting
Consistent with the __________ recognition principle, companies record revenue at the time goods are provided to customers.
Revenue
Which type of account is increased with a credit?
Revenue
The types of accounts which affect retained earnings are
Revenues, dividends, and expenses