Accounting 2

The accumulated net amount of revenue less expenses and dividends is reflected in the balance of

retained earnings

All transactions related to a particular item over a period of time are summarized in a(n):

Account

Accounts that increase with debit

Accounts receivable, advertising expenses, supplies

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the RIGHT side of the equal sign in this equation are increased with

Credit

In a double-entry accounting system, a(n) ______represents the left side of the account.

Debit

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the LEFT side of the equal sign in this equation are increased with

Debit

Because dividends reduce retained earnings, a ____ to dividends is essentially a ______ to retained earnings

Debit, Debit

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 transactions decreases stockholders' equity?

Pay salaries for the current period.

Which of the following represents an external transaction?

Payment of utility bill.

The acronym DEALOR can be used to remember how debits and credits affect different accounts. The three types of accounts that are increased with credits (represented by the LOR in the acronym) are

Receivables, owners equity, liabilities, revenues

Which of the following transactions decreases total assets?

Which of the following transactions decreases total assets?

A journal provides a

a chronological record of all transactions affecting a firm

If debits do not equal credits on a trial balance, a possible error could be

a debit was posted to the credit column for a journal entry.

The type of information included in an account includes

account title, column for debits and credits

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company. Multiple choice question.

account, general ledger

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.

account; general ledger

Which accounts require a credit entry to increase the account?

accounts payable, retained earnings revenue, common stock

The account deferred revenue is used to record

an obligation to perform services in the future.

The accounts included on the balance sheet are

assets, stockholders' equity, liabilities

Which of the following accounts would normally have a credit balance on the trial balance?

common stock, differed revenue, notes payable

In a double-entry accounting system, a(n) _____ on the right side of the account.

credit

Stockholders' equity accounts normally have a _______ balance.

credit

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

credit to common stock

Roslin Corp. provides services to customers on account of $5,000. Recording this transaction will include a

debit to accounts receivable, credit to revenues.

Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include:

debit to cash, and credit to notes payable

For every journal entry, total ____ must be equal to total credit.

debits

The acronym DEALOR can be used to remember how debits and credits affect different accounts. The three types of accounts that are increased with debits (represented by the DEA in the acronym) are (Select all the apply):

dividends, assets, expenses

The purpose of a trial balance is to

ensure debits equal credits. assist in preparing to adjust entries.

Which type of account is increased with a debit?

expense

Credits increase revenues, whereas debits increase

expenses and dividends

True or false: A ledger provides a chronological record of all transactions affecting the firm.

false

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

false, (A trial balance is a list of all accounts and their balances showing debits equals credits. A balance sheet presents assets, liabilities, and stockholders' equity.)

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

general ledger

Revenue and expense accounts are shown in the

income statement

_______ entry describes the format for recording a transaction

journal

The commonly used format for recording a transaction is referred to as a(n)

journal entry

A transaction is initially recorded in the journal, and then subsequently posted to the general ________

ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance?

ledger

A trial balance may not be free of errors because the trial balance

only determines that debits equals credits

The process of transferring information from the journal to the ledger is referred to as

posting

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as

posting/post

When should revenue be recorded?

when services are performed

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: A trial balance is used for internal purpose to check that debits equal credits.

true

A payment of cash dividends will decrease which of the following? (Select all that apply.)

Retained Earning, Assets, Stockholders' equity

What accounts normally have a credit balance?

Retained Earnings, common stock

Revenues ______ retained earnings; therefore, to increase any revenue, one would ______ the revenue account.

increase, credit

Which step in the process of measuring external transactions involves assessing the equality of total debits and total credits?

preparing a trial balance sheet

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.

Which accounts require a debit entry to increase the account?

utility expense, cash

True or false: After posting all journal entries to accounts. the sum of accounts with debit balances should equal the sum of accounts with credit balances.

true (explanation: If debits are not equal to credits, the assets will not be equal to liabilities plus stockholders' equity and the balance sheet will not balance.)

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 of the following does not represent an external business transaction?

Expiration of an insurance policy over time.

DEALOR

In accounting terminology, debit means left, and credit means right. Let's split DEALOR into its left and right side. The three accounts on the left, or debit, side of DEALOR—Dividends, Expenses, and Assets—increase with a debit and decrease with a credit. In contrast, the three accounts on the right, or credit, side—Liabilities, Owners' (stockholders') equity, and Revenues—increase with a credit and decrease with a debit.

Which of the following transactions increases total assets?

Provide services to customers on account.

Which of the following transactions increases total liabilities?

Purchase office supplies on account.

Which of the following accounts would normally have a debit balance on the trial balance?

Supplies Cash Utility Expense

Accounts Receivable

When a company receives cash in advance from customers for services to be performed in the future, the transaction affects the ______ account.

A journal entry should contain which of the following information?

accounts and amounts credited/debited, date and description of the transaction

A list of all account names used to record transactions of a company is referred to as a:

charts of accounts

Turkey Corp. provides services to customers on account for $3,000. Recording this transaction will include a

credit to revenues

A proper journal entry includes the ______, the account and amount debited, the account and amount credited, and a brief explanation of the transaction.

date

Expenses DECREASE retained earnings therefore any expenses would _____ the expense account

debit

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

debit, credit

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

debts and credits

Dividends ______ retained earnings; therefore, to increase dividends, one would ______ the dividends account.

decrease, debit

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

t-account

The balance in retained earnings represents:

the accumulated net amount of revenue minus expenses and dividends over the company's lifetime