Accounting Chater 2

Tabor Company issues $20,000 of common stock to investors. Recording this transaction will include a credit to

Common Stock

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

False

True or false: The term debit means increase, and the term credit means decrease.

False

Which of the following represents a common advantage of a computerized accounting system?

Journal entries are instantly posted to the ledger

A transaction is initially recorded in the general _____ and then subsequently posted to the general _________

Journal, Ledger

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

Ledger

Which of the following are external transactions?

Purchasing inventory from suppliers, Borrowing money from the bank, Paying salaries to employees

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

account; general ledger

The two components of stockholders' equity are

common stock and retained earnings

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

debits and credits.

Credits increase revenues, whereas debits increase

expenses and dividends.

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.

The purpose of a journal is to

record a chronological listing of every transaction for a company

The type of information included in an account includes

the account title and columns for debit and credit

The term debit means to place the entry on the ________ hand side of the account, and the term credit means to place the entry on the ________ hand side of the account.

Left, Right

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

Posting

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

Revenue

Which type of account is increased with a credit?

Revenue

The types of accounts which affect retained earnings are

Revenues, dividends, and expenses