Chapter 2 Smartbook Assignment

Which of the following contains a list of transactions affecting each account and the account's balance? - Account - General journal - General ledger

- General ledger

On May 1, Ace Electronics ordered office equipment. The equipment was delivered to Ace on May 15, and Ace agreed to pay for it by the end of the month. Ace paid for the equipment on May 31. When will Ace make the first entry in its accounting system for this purchase? - May 31 - May 1 - May 15

- May 15

Rent paid in advance and classified as an asset is referred to as - rent equity. - rent expense. - prepaid rent. - rent payable.

- prepaid rent.

When services are provided on account, what is the effect on stockholders' equity? - Decrease - No effect - Increase

- Increase

When should revenue be recorded? - When the services are performed - When the company receives the payment for the services - When a contract is signed promising to perform the services

- When the services are performed

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply) - Revenue is increased - Another asset is increased - A liability is decreased - Stockholders' equity is increased

- Another asset is increased - A liability is decreased

Select all that apply Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect? - Notes payable decreases - Cash increases - Common stock decreases - Notes payable increases - Cash decreases - Common stock increases

- Cash increases - Notes payable increases

Jeremy issues 5,000 shares of common stock for $10 per share. Which of the following accounts are affected? (Select all that apply.) - Common stock - Cash - Revenue - Notes payable

- Common stock - Cash

London Corp. issues 1,000 shares of stock for $20 per share. What are the effects of this transaction? Multiple select question. - Common stock is increased. - Cash is decreased. - Revenue is increased. - Cash is increased.

- Common stock is increased. - Cash is increased.

The last step for analyzing the effect of transactions is: - Determine one account in the accounting equation that will increase or decrease - Confirm that assets are equal to liabilities plus stockholders' equity - Determine a second account in the accounting equation that will increase or decrease

- Confirm that assets are equal to liabilities plus stockholders' equity

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

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

Select all that apply On February 1, Domino Corporation ordered inventory. The inventory was received on February 15. Domino paid for the inventory on February 27. On which of the following dates will Domino record a transaction? (Select all that apply) - February 15 - February 1 - February 27

- February 15 - February 27

Price Company provides cleaning services to customers for $10,000 cash. What are the effects of this transaction on the accounting equation? (Select all that apply.) - Increase retained earnings - Decrease stockholders' equity - Decrease liabilities - Increase assets

- Increase retained earnings - Increase assets

The accounting equation is: Assets = Liabilities + - Creditors' Interest - Stockholders' Equity - Net Income - Retained Earnings - Revenues

- Stockholders' Equity

Rory purchases supplies for cash. Which of the following occurs? - Total assets increase - Total assets remain the same - Total assets decrease

- Total assets remain the same

True or false: The accounting equation must always remain in balance. - True - False

- True

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

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

The process of transferring information from the journal to the ledger is referred to as - preparing journal entries. - transaction analysis. - posting. - preparing adjustments.

- posting.

he purpose of a journal is to - record a chronological listing of every transaction for a company. - maintain a balance for each account. - record all transactions for a particular item.

- record a chronological listing of every transaction for a company.

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

False Reason: The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.

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

True

In a double-entry accounting system, the ____________ represents the left side of the account. (Enter one word per blank)

debit

A(n) __________ transaction involves an exchange between the company and a separate economic entity. (Enter one word per blank)

external

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

ledger

Consistent with the _______________ recognition principle, companies record revenue at the time goods are provided to customers. (Enter only one word.)

revenue