Accounting 284 Chapter 2

The Common Stock account is increased with an entry on the

Right (Credit)

The Retained Earnings account is increased with an entry on the _____________ side of the account.

Right (Credit)

Which accounts are affected by borrowing from a bank

Cash and Notes Payable

Which of the following are assets?

Equipment, Cash, Land

Which would be captured and reported by an accounting system?

Financing activities, purchase of equipment on account, investing activities

Equipment on a balance sheet is the result of a(n) _______ activity.

Investing

The line item, Land, on the balance sheet results from a(n) _____________.

Investing activity

After transactions have been recorded in the ________, the entry is then posted to each __________ account affected by the transaction so that the balances can be summarized.

Journal, Ledger

The retained earnings account is increased with an entry on the _____________ side of the account.

Right (Credit)

A ledger is used to _________.

Show increases and decreases in individual accounts, as well as an ending balance.

Increases and decreases in individual accounts, as well as an ending balance, are shown in a(n) _____________.

T-account, ledger

Steps in Accounting system

Transactions are recorded in the journal Transactions are posted to the ledger Account balances are computed

A company issued 1,000 shares of stock for $100,000. The increase in the Common Stock account would be recorded with a ____________.

Credit

An increase in Retained Earnings would be recorded with a ___________.

Credit

On April, Pizza Aroma hired a new employee at a rate of $1000 per month to start work at the beginning of May. In April, Pizza Aroma should record.

Nothing, because an exchange in promises is not a transaction.

Melon-Cauli Grocers, Inc. had a $10,000 balance in its Accounts Payable account at the beginning of the month. During the month, it made $60,000 of purchases on account due within 1 month and paid $40,000 of the amounts owed. The Accounts Payable balance at the end of the month has a ___________ balance.

30,000 credit