accounting 2
Which of the following statements is accurate regarding Accounts payable?
Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.
Which of the following accounts would be considered an asset? (Check all that apply.)
Accounts receivable Supplies Cash Building
Fill in the blank question. Holt Computer Services purchased $2,000 of new equipment and paid immediately. Illustrate how to record the transaction into T-accounts of Holt Services by completing the following sentence. The Equipment account would be (debited/credited) on the (left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.
Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right
L. Lyons started a business and invested $4,000. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be (debited/credited) on the (left/right) side of the T-account and the Owner, Capital account would be (debited/credited) on the (left/right) side of the T-account.
Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right
Identify which of the following lists include only examples of assets.
Building, cash, accounts receivable
Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)
Checks Coins Money orders
J. Jackson invested $1,000 in his business. Show how to use T-accounts to record this transaction by selecting the correct answer below.
Debit Cash; credit Owner, Capital.
Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)
Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. Equipment is an asset.
True or false: Assets are claims by creditors against the company.
False
True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.
False
Which of the following statements is (are) correct regarding a journal? (Check all that apply.)
In a journal, both the debit and credit side of the transaction can be seen. Transactions are generally entered in chronological order. A journal is used to record business transactions.
There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?
Owner's capital and revenues
Which of the following statements is the correct definition of owner's equity?
Owner's equity is the owner's claim on a company's assets.
Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)
Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances. List each account title and its amount from the ledger.
Which of the following statements best describes the purpose of the Owner, Capital account?
When an owner invests in a business, the invested amount is recorded in the Owner, Capital account
Which of the following statements is (are) correct regarding the Owner, Capital account? (Check all that apply.)
When an owner invests in a business, the invested amount is recorded in the Owner, Capital account
The general ledger can be used to determine which of the following: (Check all answers which apply)
increases and decreases in all accounts in a business. all accounts used by a company and their balances. common and unique accounts used by a business.
Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)
A liability is a claim by creditors against the assets of a business. A liability can be settled by transferring assets or providing products or services to others. A liability is a debt owed by the business.
Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)
Another name for a note receivable is a promissory note. It is the promise of another entity to pay a specific sum of money on a specified future date. Notes receivable is classified as an asset.
Which of the following statements is accurate about the Land account? (Check all that apply.)
The Land account is used to record the costs of land purchased by the business. The Land account is an asset. The Land account is increased on the left side of its T-account.
Which of the following statements is (are) correct regarding the Owner, Capital account? (Check all that apply.)
The Owner, Capital account is increased on the right side of the T-account. The Owner, Capital account is used to record investments by the owner. The Owner, Capital account is an equity account.
Which of the following statements is the correct definition of a liability?
A liability is a claim by a creditor against the assets of a business.
Which of the following statements is the best definition of an asset?
Assets are resources owned or controlled by a company and that have expected future benefits.
Which statement is correct regarding entering transactions into the accounting equation?
After recording a transaction, the total of the right side of the accounting equation must equal the total of the left side of the accounting equation.
Equipment is a(n) (asset/liability/expense) account. It is reported on the (left/right) side of the accounting equation and is (increased/decreased) when equipment is purchased.
Blank 1: asset Blank 2: left Blank 3: increased
When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).
Blank 1: assets Blank 2: expense
Supplies are (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as (assets/expenses/liabilities).
Blank 1: assets Blank 2: expenses
Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.
Coins, checks, money orders
A trial balance is a(n) (list/balance/chart) of accounts and their balances at a point in time and is used to confirm that the sum of debit account balances equals the sum of account balances. Use one word for each blank.
Blank 1: list Blank 2: credit
Which statement best describes a T-account?
A T-account represents a ledger account and is a tool used to show the effects of one or more transactions.
Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)
A T-account represents a ledger account. A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction.
Which of the following statements is the correct definition of a creditor?
A creditor is an individual or organization that has a right to receive payments from a business.
J. JAn income statement reports:
the revenues minus the expenses incurred by a business
Notes receivable is considered a(n) (asset/liability).
Blank 1: asset
S. Gunner purchased a piece of equipment costing $6,000. She paid $1,000 immediately and put the rest on account. Show how to record this transaction to the T-accounts by selecting the correct answer below.
$6,000 on left side of the Equipment account; $5,000 on the right side of the Accounts payable account; $1,000 on the right side of the Cash account.
Choose the statement below that correctly explains a general journal.
A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.
The correct definition of an "account" includes which of the following?
A record of increases and decreases in a specific asset, liability, equity, revenue, or expense.
Which of the following is the best definition of a source document in the accounting process?
A source document identifies and describes transactions and is the basis for entering an event into the accounting system.
Which of the following statements explains what a trial balance is?
A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.
When Myrtle withdraws $50 from the business for personal use, how would this affect the equity of a business?
Assets are decreased and equity is decreased.
P. Butter purchased $300 of supplies for cash. Illustrate how to record the transaction into T-accounts by completing the following sentence. The Supplies account would be (debited/credited) on the (left/right) side of the T-account and the Cash account would be (debited/credited) on the (left/right) side of the T-account.
Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right
An account is a record of increases and in a specific asset, liability, equity, revenue or expense.
Blank 1: decreases
Fill in the blank question. Accounts payable refer to promises to pay later by the business and are classified as a(n) (asset/liability/expense) account.
Blank 1: liability or liabilities
Which of the following statements is the best definition of the Chart of Accounts?
It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.
Jeff, the owner of a business, invests an additional $100 into his business from his personal checking account. How would this affect the equity of his business?
Owner, Capital would be increased and total equity would also increase.
Simon, the owner of a business, invests $10,000 in his new business, Simon's Sports. How would this affect the equity of a business?
Owner, Capital would be increased, so equity is increased.
Jeff, the owner of a business, withdrew $100 from the business for personal use. How would this affect the total equity of his business?
Owner, Withdrawals would be increased and total equity would decrease as well.
Which of the following would be considered a source document in an accounting system? (Check all that apply.)
Purchase order Payroll records Sales receipt Checks
Which of the following accounts impact equity? (Check all that apply.)
Revenue Expenses Owner, Withdrawal Owner, Capital
The business earns $700 of consulting revenue. How would these earnings affect the total equity of a business?
Revenues increase, so total equity is increased.
The business earns $2,800 cash for services performed. How would this transaction affect the total equity of a business?
Revenues would be increased, so equity is increased.
Which of the following statements are accurate regarding supplies? (Check all that apply.)
Supplies are assets until they are used. Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. When supplies are purchased, they are added to the Supplies account. Unused supplies are treated as assets.
On Nov.1, L. Lyons pays $2,400 cash for supplies. Show how to use T-accounts to record this transaction by selecting the correct answer below.
Supplies would be debited, and Cash would be credited.
Which of the following best and fully describes a general ledger?
The general ledger is a record containing all accounts used by a company.
An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time? (Check all that apply.)
The initial payment will be recorded as an increase to a Prepaid Insurance account. As a portion of the policy expires, the expired portion will be removed and transferred to an expense account. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset.
Which of the following would be included on an income statement? (Check all that apply.)
Total expenses Total revenues Net income
