accounting chapter 2

a list of all accounts and their balances at a particular date showing the debits equal credits is referred to a a ____ ___

trial balance

which of the following are external transactions

-borrowing money from the bank -purchasing inventory from suppliers -paying salaries to employees

which of the following are stockholder equality accounts?

-common stock -retained earnings

which of the following are stockholder equity accounts?

-retained earnings -common stock

the two roles of financial accounting are to:

1. communicate information to external parties for decision making purposes 2. measure business activities of the company

a ____ is maintained for each financial statement item, where as a __ contains all of the accounts of the company.

account; general ledger

when a company performs services for a customer, and the customer agrees to pay for the services at a later date, the transaction is recorded in which account?

accounts receivable

the accounting equation is

assets= liabilities +stockholder's equity

smith's company's journal shows a debit to cash and a credit to notes payable, both for 15,000. this indicates that smith company

borrowed 15000 cash and signed a note

tabor company issues $20,000 of common stock to investors. recording this transaction will include a credit to

common stock

the two components of stockholders equity are

common stock and retained earnings

pluto inc. borrows 3,000 from second national bank by signing a promissory note. recording this transaction will include which of the following?

credit note payable debit cash

Shannon Corporation issues common stock for $25,000. Recording this transaction will include a

credit to common stock

carnival company issues commons tock to investors for 50,000. which of the following is used to record this transaction?

debit cash; credit common stock

rolan corporation borrows 10,000 from the bank by signing a promissory note. recording this transaction will include?

debit to cash credit to notes payable

accounts on the left Side of the accounting equation(assets) are increased with a _____ to the account, whereas accounts on the right side of the accounting equation are increased with a ___

debit, credit

A T-Account has space at the top for the account title and two sides for recording ______ and ______ to the account

debits and credits

an account should have an account title, account number, a place for the date of transactions, and two columns for

debts and credits

dividends paid to stockholders will cause retained earnings to

decrease

what is the effect of dividends on retained earnings?

decrease

the purpose of a journal is to

def: provides chronological record of all transactions affecting a firm. Prior to the widespread use of computers, companies, recorded their transactions in paper-based journals.

which type of account is increased with a debt?

expense

credits increase revenues, whereas debits increase ___

expenses and dividends

which contains a list of transactions affecting each account and the account's balance?

general ledger

revenues cause retained earnings to

increase

what effect does revenue have on retained earnings

increase

net income ____ retained earnings

increases

klick's journal shows a debit to cash and a credit to common stock. this journal entry indicates that Klick:

issued shares to stockholders

computerized system

journal entries are instantly posted to the general ledger

manual sytem

journal entries are posted periodically to the general ledger

a transaction is initially recorded in the journal, and then subsequently posted in the general _____

ledger

which of the following includes the list of transactions affecting each individual account and the account balance?

ledger

the term debit means to play the entry on the _____ hand side of the account

left

the accounting equation is: Assets=_______ + stockholders equity

liabilities

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 in the list of transactions balance.

Ursula Company's bookkeepers records revenue relating to a customer transaction. This indicates that the company

provides goods or services to a customer

which of the following is an external transaction

purchasing supplies from a vendor

consistent with the ___ recognition principle, companies record revenue at the time goods are provided to customers.

revenue

which type of account is increased with credit

revenue

the two basic components for calculating net income are _____ and ___

revenues and expenses

the types of accounts which affect retained earnings are

revenues, expenses, and dividends

what are the three components of retained earnings?

revenues, expenses, and dividends

term credit means to place the entry on the ___ hand side of the account

right

an simplified version that I used informally for analysis instead of drawing formal general ledger account is referred to as a

t-account

the type of information included in an account includes

the account title -columns for debts and credits

accounts receivable are assets which represent

the amounts owed by customers