ACCT 2013H Smartbook Chapter 2

journal

A chronological record of all economic events affecting a firm are recorded in a(n) _______________.

trial balance

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n) _____________________.

debits, credits

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

ledger

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

account, general ledger

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

debit, credit

Accounts on the left side of the accounting equation (assets) are increased with a(n) ___________ to the account, whereas accounts on the right side of the accounting equation are increased with a(n) ____________.

assets

Accounts receivable are a) liabilities b) a component of net income and retained earnings c) assets d) stockholders' equity accounts

the amounts owed by customers

Accounts receivable are assets which represent a) the amounts owed to suppliers b) total revenues for the period c) the amounts owed by customers d) net income for the period

debits, credits

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

t-account

An simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a ________________.

Debit cash; credit common stock.

Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction? a) Debit common stock; credit retained earnings. b) Debit common stock; credit cash. c) Debit cash; credit common stock. d) Debit cash; credit revenue.

revenue

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

expenses and dividends

Credits increase revenues, whereas debits increase a) common stock and retained earnings b) liabilities and stockholders' equity c) expenses and dividends d) assets and liabilities

decrease

Dividends paid to stockholders will cause retained earnings to a) increase b) decrease c) remain the same

Debit to cash, Credit common stock

Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following? a) Debit to cash b) Debit to retained earnings c) Credit common stock d) Credit revenues

Credit note payable, Debit cash

Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following? a) Credit revenue b) Debit notes receivable c) Credit note payable d) Debit cash

Debit cash, Credit note payable

Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following? a) Debit cash b) Credit revenue c) Debit notes receivable d) Credit note payable

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

Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction? a) Debit account receivable $3,000; credit note payable $3,000. b) Debit cash $3,000; credit note payable $3,000. c) Debit note payable $3,000; credit note receivable $3,000. d) Debit cash $3,000; credit note receivable $3,000.

credit to notes payable, debit to cash

Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include: a) debit to accounts receivable b) credit to notes payable c) debit to cash d) credit to retained earnings

borrowed $15,000 cash and signed a note

Smith Company's journal shows a debit to cash and a credit to notes payable, both for $15,000. This indicates that Smith Company: a) received cash of $15,000 from an investor b) paid a loan in the amount of $15,000 c) borrowed $15,000 cash and signed a note

common stock

Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to a) common stock b) retained earnings c) cash d) revenues

Stockholder's Equity

The accounting equation is: Assets = Liabilities + _________________.

posting

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 a) preparing adjustments b) transaction analysis c) preparing journal entries d) posting

provide in a single location the list of transactions affecting each account and the account's balance

The purpose of a general ledger is to a) record a chronological listing of the accounts used by a particular company b) record all transactions for a particular item c) provide in a single location the list of transactions affecting each account and the account's balance

record a chronological listing of every transaction for a company

The purpose of a journal is to a) maintain a balance for each account b) record all transactions for a particular item c) record a chronological listing of every transaction for a company

left, right

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.

revenues, expenses

The two basic components for calculating net income are ____________ and _____________.

common stock and retained earnings

The two components of stockholders' equity are a) retained earnings and notes payable b) revenues and dividends c) common stock and retained earnings d) assets and liabilities

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

The two roles of financial accounting are to: a) measure business activities of the company b) measure and report results to taxing authorities c) report cost accounting information for internal decisions d) communicate information to external parties for decision making purposes

the account title, columns for debits and credits

The type of information included in an account includes a) a posting reference b) a daily total c) the account title d) columns for debits and credits

dividends, expenses, revenues

The types of accounts which affect retained earnings are a) assets b) dividends c) liabilities d) expenses e) revenues

False

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

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

provided goods or services to a customer

Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company a) provided goods or services to a customer b) received a cash payment from a customer c) signed a contract with a customer

increases

What effect does revenue have on retained earnings? a) increases b) decreases c) no effect

increases

What is the effect of net income on retained earnings? a) increases b) decreases c) no effect

Purchasing inventory from suppliers, Borrowing money from the bank, Paying salaries to employees

Which of the following are external transactions? a) Purchasing inventory from suppliers b) Borrowing money from the bank c) Using supplies purchased last month d) Paying salaries to employees

common stock, retained earnings

Which of the following are stockholder equity accounts? a) inventory b) common stock c) accounts receivable d) retained earnings e) notes payable

general ledger

Which of the following contains a list of transactions affecting each account and the account's balance? a) general journal b) general ledger c) account

ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance? a) journal b) ledger c) account

Purchasing supplies from a vendor

Which of the following is an external transaction? a) Using supplies on hand b) Earning revenues after cash is received c) Purchasing supplies from a vendor

Journal entries are instantly posted to the ledger

Which of the following represents a common advantage of a computerized accounting system? a) Prevents errors in the preparation of journal entries b) Journal entries are instantly posted to the ledger c) Ensures accuracy of all the accounts in the general ledger

expense

Which type of account is increased with a debit? a) stockholders' equity b) expense c) liability d) revenue