Accounting Chapter 3

Which of the following journal entries is recorded correctly and in the basic format? Salaries and Wages Expense 550 Advertising Expense 950 Cash 1,600 Salaries and Wages Expense 550 Cash 1,500 Advertising Expense 950 Salaries and Wages Expense 550 Advertising Expense 950 Cash 1,500 Cash 1,500 Salaries and Wages Expense 550 Advertising Expense 950

Cash 1,500 Salaries and Wages Expense 550 Advertising Expense 950

Liabilities - _______ should exceed ________

Credits, Debits

What is the appropriate order for a company's chart of accounts? Assets, liabilities, revenues, expenses, stockholders' equity Assets, liabilities, stockholders' equity, expenses, revenue Assets, liabilities, stockholders' equity, revenues, expenses Assets, revenues, expenses, liabilities, stockholders' equity

Assets, liabilities, stockholders' equity, revenues, expenses

Basic Accounting Equation

Assets=Liabilities + Stockholders equity

_________________have the opposite effect: expenses decrease stockholders' equity.

Expenses

Assets - ______ should exceed ________

Debits, credits

Retained Earnings=

Revenues-expenses-dividends

Identifies, records, and communicates the economic events of the organization to the interested users.

The Accounting Information System

____________ are economic events that require recording in the financial statements.

Transactions

Not all activities represent transactions. True or False

True

if debits are greater than credits the account will have a

debit balance

When a trial balance balances, it is an indication that the account balances are correct. debits equal credits. all transactions have been journalized. all journal entries have been posted.

debits equal credits.

The double-entry system requires that each transaction must be recorded in a journal and in a ledger. in at least two different accounts. first as a revenue and then as an expense. in two sets of books.

in at least two different accounts.

Increases to an account will always be on the __________ side of the T Account.

normal balance

All of the following are characteristics of every accounting information system except it is a system -of data storage hardware for the chart of accounts. -that communicates financial information to decision makers. -that collects transaction data. -that processes transaction data.

of data storage hardware for the chart of accounts.

The purpose of earning ________ is to benefit the stockholders.

revenues

Posting normally occurs before journalizing. is an optional step in the recording process. transfers ledger transaction data to the journal. transfers journal entries to ledger accounts.

transfers journal entries to ledger accounts.

A trial balance proves the mathematical accuracy of journalized transactions. is a list of accounts with their balances at a given time. proves that all transactions have been recorded. will not balance if a correct journal entry is posted twice.

is a list of accounts with their balances at a given time.

The right side of an account reflects all transactions for the accounting period. is the correct side shows all the balances of the accounts in the system. is the credit side.

is the credit side.

Transactions are initially recorded in chronological order in a __________ before they are transferred to the accounts. journal register T account ledger

journal

Accounts with normal credit balances include assets and liabilities. revenues and assets. revenues and expenses. liabilities and stockholders' equity.

liabilities and stockholders' equity.

An account is a part of the financial information system and is described by all except which one of the following? An account consists of three parts. An account has a title. An account has a debit and credit side. An account is a source document.

An account is a source document.

Which statement about an account is true? -An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items. -There are separate account for specific assets and liabilities but only one account for stockholders' equity items. -The left side of an account is the credit or decrease side. -In its simplest form, an account consists of two parts.

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.

Which of the following events is not recorded in the accounting records? Equipment is purchased on account. A cash investment is made into the business. The owner withdraws cash for personal use. An employee is terminated.

An employee is terminated.

Which of the following is the correct sequence of events? Analyze a transaction; record it in the journal; post it to the ledger Record a transaction in the journal; analyze the transaction; post it to the ledger Analyze a transaction; post it to the ledger; record it in the journal None of the answer choices provides the correct sequence

Analyze a transaction; record it in the journal; post it to the ledger

The process of identifying the specific effects of economic events on the accounting equation.

Analyzing Transactions

Which accounts normally have debit balances? Assets, dividends, and expenses Assets, expenses, and retained earnings Assets, expenses, and revenues Assets, liabilities, and dividends

Assets, dividends, and expenses

Which one of the following represents the expanded basic accounting equation? Assets - Liabilities - Dividends = Common Stock + Revenues - Expenses Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues Assets = Revenues + Expenses - Liabilities Assets = Liabilities + Common Stock + Dividends - Revenue - Expenses

Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues

105. Which of the following correctly identifies normal balances of accounts? Assets Credit Liabilities Debit Common Stock Debit Revenues Credit Expenses Debit Assets Debit Liabilities Credit Common Stock Credit Revenues Debit Expenses Credit Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Credit Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit

Assets Debit Liabilities Credit Common Stock Credit Revenues Credit Expenses Debit

listing of accounts used by a company to record transactions. listing of accounts used by a company to record transactions.

Chart of Accounts

Stock holders equity=

Common Stock + Retained Earnings

Which of the following items has no effect on retained earnings? Land purchase Revenue Expense Dividends

Land purchase

Which of the following is not a part of a complete journal entry? The accounts and amounts to be debited and credited A brief explanation of the transaction The balance of each account affected by the transaction The date of the transaction

The balance of each account affected by the transaction

A T-account is -a special account used instead of a journal. -a special account used instead of a trial balance. -a way of depicting the basic form of an account. -used for accounts that have both a debit and credit balance.

a way of depicting the basic form of an account.

For the basic accounting equation to stay in balance, each transaction recorded must affect the same number of asset and liability accounts. affect two or less accounts. always affect exactly two accounts. affect two or more accounts.

affect two or more accounts.

if credits are greater than debits the account will have a

credit balance

The normal balance of any account is the side which decreases that account. right side. left side. side which increases that account.

side which increases that account.

The effect of debits and credits on revenue accounts is the same as their effect on _________________.

stockholders' equity

If an account is debited in the journal entry, then that account will be both debited and credited in the ledger. The transactions will not balance. that account will be debited in the ledger. that account will be credited in the ledger.

that account will be debited in the ledger.

In recording an accounting transaction in a double-entry system -the number of debit accounts must equal the number of credit accounts. -there must always be entries made on both sides of the accounting equation. -the amount of the debits must equal the amount of the credits. -there must only be two accounts affected by any transaction.

the amount of the debits must equal the amount of the credits.

The left side of an account is blank a description of the account. the balance of the account. the debit side.

the debit side.