Chapter 3 ACC
What does the double-entry system require?
Each transaction must be recorded in at least two different accounts.
When presented with a source document as evidence of a transaction, a company will first take which of the following steps?
Enter the transaction in a journal.
Debits increase both assets and liabilities. True or False
False
True or False: A transaction was not posted. This would cause the trial balance to be out of balance.
False
Which of the following accounts would appear nearest to the bottom of a company's trial balance?
Rent expense (or expenses in general)
The basic form of an account is called a _______
T-account
Which of the following results when a company purchases equipment for $1,800 cash?
Total assets remain unchanged.
Debits increase assets and decrease liabilities. True or False
True
Source documents can provide evidence that a transaction has occurred. True or false?
True
There is no need to open a new account every time a business enters into a transaction.
True
The classification "liability" includes
Unearned service revenue
Which of the following gives the usual sequence of steps in the transaction recording process?
analyze, journalize, post to the ledger
Typically the _______ ______ ________ begins with assets accounts?
chart or accounts
In what order are transactions in a journal initially recorded?
chronological order
Posting requires the transfer of ________ to the ledger.
every transaction in a journal
Which of the following is NOT part of an account in its simplest form?
explanation column
A company uses their trial balance to prepare their
financial statements
During posting, where is information transferred?
from the journal to ledger
Transferring the journal information to the ledger
is the final step in the recording process
Chronological order is the order in which transactions in a _________ are initially recorded.
journal
The purpose of the __________ is to keep in one place all information about changes in specific account balances.
ledger
Transactions are entered in the journal and then transferred to
ledger accounts
How is the Unearned Service Revenue account classified?
liability
Cash increases and accounts receivable decreases when a business
pays on an account payable.
Accumulating the effects of journalized transactions in the individual accounts is the main purpose of the procedure called
posting
The procedure that involves transferring journal entries to the ledger accounts is called
posting
When a company transfers journal entries to the ledger accounts, this process is called .
posting
The usual sequence of steps in ________ is analyze, journalize, post to the ledger.
recording transactions
Receipts of cash in advance from customers are not treated as revenue at the time of receipt because
revenue cannot be recognized until the work is performed.
Errors in journalizing are ________ when a company compiles its trial balance for a period.
sometimes uncovered
Evidence for a transaction comes in the form of
source documents
Stockholders' equity is not affected when
the company pays a portion of an account payable.
Which of the following represents the characteristics of every accounting information system? Select all that apply.
- It processes transaction data. - It communicates financial information to decision-makers. - It collects transaction data.
With which type of account does the chart of accounts typically begin?
Assest accounts
________ increase assets and decrease liabilities.
Debits
Which of the following are considered financing activities? Select all that apply.
- borrowing money - issuing shares of stock
The basic format of a journal includes a
- brief explanation. - account title column. - date column.
A(n) ________ is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.
account
An individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items is a(n)
account
Beacon Books issues common stock for $500,000 and uses $100,000 of the cash for building improvements. As a result,
assets will be increased by $500,000.
If a company is using the double-entry system, each transaction is required to be recorded in
at least two different accounts.
When is a trial balance customarily prepared?
at the end of an accounting period
Each time a business enters into a new transaction, it _____ to set up a new account.
does not need
All business transactions are first entered in
the journal
A __________ ____________ is an accounting record that includes a list of accounts and their balances at a given time.
trial balance