ACC 210 Chapter 2 NCSU
In a double-entry accounting system, a(n) _____ represents the left side of the account.
debit
Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?
debit to cash Credit to notes payable
Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:
debit to cash credit to notes payable
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits.
Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:
issued shares to stockholders
A transaction is initially recorded in the journal, and then subsequently posted to the general
ledger
Accounts receivable are assets which represent
the amounts owed by customers.
True or false: A ledger provides a chronological record of all transactions affecting the firm.
False
Shannon Corporation issues common stock for $25,000. Recording this transaction will include a
credit to common stock.
Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to
Common Stocks
Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?
Credit common stock Debit to cash
Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction?
Debit cash $3,000; credit note payable $3,000.
Which type of account is increased with a debit?
Expense
Identify the three components of retained earnings.
Expenses Dividends Revenues
Which of the following are components of calculating net income?
Expenses Revenues
Which of the following contains a list of transactions affecting each account and the account's balance?
General ledger
What is the effect of net income on retained earnings?
Increases retained earnings
Which of the following represents a common advantage of a computerized accounting system?
Journal entries are instantly posted to the 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 stockholder equity accounts?
Retained earnings Common stock
A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.
account; general ledger
Accounts receivable are
assets
A journal provides a
chronological record of all transactions affecting a firm.
The two components of stockholders' equity are
common stock and retained earnings.
The two roles of financial accounting are to:
communicate information to external parties for decision making purposes. measure business activities of the company.
A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account.
debits; credits
Credits increase revenues, whereas debits increase
expenses and dividends
A(n) _____ transaction involves an exchange between the company and a separate economic entity.
external
True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.
false
True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.
false
Revenues cause retained earnings to
increase
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
posting.
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.
Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company
provided goods or services to a customer.
Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have
purchased equipment and signed a note for the purchase price
The purpose of a journal is to
record a chronological listing of every transaction for a company.
Consistent with the Blank 1 of 1 recognition principle, companies record revenue at the time goods are provided to customers.
revenue
An simplified version that is used informally for analysis instead of drawing a formal general ledger account is referred to as a:
t-account
A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)
trial balance
True or false: An external transaction is a transaction the firm conducts with a separate economic entity.
true
What are the three components of retained earnings?
Revenues, expenses, and dividends
A debit is on the ______ side of the account.
left
The accounting equation is: Assets = _______ + Stockholders' Equity.
liabilities
The type of information included in an account includes
the account title. columns for debits and credits
