Accounting Ch.2 Required and Optional Notes

computed

account balances are _______

short term

one year note

-affect assets, liabilities, and/or stockholders' equity -have at least two effects on the accounting equation

All transactions...

account balances

Although the ledger shows the effects of transactions, it does provide account balances. The journal shows the effects of transactions but does not provide __________

both what is received and what is given in exchange are recorded

An accounting system is referred to as a double-entry system because...

decrease

Debits to a corporations stockholders' equity accounts cause its total stockholders equity to ____________

investing

Equipment on a balance sheet is the result of an _______ activity

Nothing, because an exchange of promises is not a transaction

In April, Pizza Aroma hired a new employee at a rate of $1,000 per month to start work at the beginning of May. In April, Pizza Aroma should record....

620,000 for common stock

Issued 6,200 shares of common stock for $620,000 cash- it would be _______

land, buildings, machinery, equipment

Non-current assets that are found on the balance sheet

decreases

One asset account increases and one asset account __________

increases

One asset account increases and one stockholder's equity account __________

1). record a journal entry 2). summarize in the ledger (t-accounts) 3). prepare an unadjusted trial balance 4). adjust the accounts 5). prepare the financial statements 6). close the books

Steps in the accounting cycle

cost

The _______ principle requires assets to be initially recorded at the amount paid or payable on the date of the transaction

- a debit to logo/trademark -credit to cash

The journal entry to record the payment of $30,000 cash for the creation of the company's logo includes:

No effect

What is the effect of total assets when a company purchases a cash register for a cash payment of $1200?

1). Liability 2). Notes payable

When a company borrows from a bank by signing a formal agreement, an asset titled cash is increased and a _________ titled _______ is increases

-assets increase -liabilities increase

When a company buys an asset on account...

-debit accounts payable -credit cash

When a company pays for amounts purchased on account, the entry includes??

1). Debt 2). Equity

_______ financing is obtained from creditors and ______ financing is obtained from owners

1). cash 2). supplies (went first because it's a current asset unlike equipment) 3). Equipment

assets order

debit

the cash t-account is increased with an entry on the _____ side of the t-account

-total assets to equal total liabilities plus stockholders equity -debits to equal credits

the double-entry system requires:

journal

the formal document that lists all the daily journal entries, but does not provide account balances, is the _______

trial balance

the internal report that lists all of the accounts and their balances and is used to determine that the total debits equal total credits is called

decrease

Debits to a corporation's stockholders' equity accounts cause its total stockholders' equity to _______

$1,000 of credits

If a company records $1,000 of debits, it must have recorded...

ledger

transactions are first recorded in the journal and then are summarized in the ______

ledger

transactions are posted to the _______

journal

transactions are recorded in the _______

ledger

what comes after the journal

cash

what does a business typically receive when it issues stock to owners?

the general journal also known as the journal

-is where transactions are first recorded -does not provide account balances -is where the effects of each transaction is recorded chronlogically

long term

more than two years

classified blanace sheet

shows subtotals for current assets and current liabilities