Accounting 230- Chap. 2 Smartbook

When supplies are purchased on account, which of the following occurs?

A liability increases.

The first step for analyzing the effect of transactions is:

Determine one account in the accounting equation that will increase or decrease

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

account; general ledger

A journal provides a

chronological record of all transactions affecting a firm

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

credits.

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

date

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

posting

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

revenue

Clem Corporation issues 1,000 shares of common stock for $25,000. Clem purchased equipment for $10,000 by borrowing from the bank. Clem's total assets are

$35,000.

A journal entry should contain which of the following information?

Accounts and amounts credited Accounts and amounts debited Description of the transaction The date

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

Ledger

Identify the three components of retained earnings.

Revenues Dividends Expenses

What are the three components of retained earnings?

Revenues, expenses, and dividends

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):

assets. dividends. expenses.

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

debit; debit

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

debits

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

decrease; debit

Expenses ______ retained earnings; therefore, to increase any expense, one would ______ the expense account.

decrease; debit

The types of accounts which affect retained earnings are

dividends. revenues. expenses.

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

increase; credit