ACCT 2301 Chapter 2
A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.
-Account -General ledger
Computerized system ---> Manual system---->
-Choice, Journal entries are instantly posted to the general ledger Journal entries are instantly posted to the general ledger -Choice, Journal entries are posted periodically to the general ledger Journal entries are posted periodically to the general ledger
True or false: The two functions of financial accounting are to measure business activities and prepare tax returns.
A. The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes. B. The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.
The accounting equation is:
Assets = Liabilities + Owner's Equity
Which of the following are external transactions?
Borrowing money from the bank Purchasing inventory from suppliers Paying salaries to employees
Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction?
Debit cash; credit common stock.
True or false: A ledger provides a chronological record of all transactions affecting the firm.
False
The term debit means increase, and the term credit means decrease.
False(Reason: Debit means left; credit means right. Some accounts you debit to increase; other accounts you credit to increase.)
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 includes the list of transactions affecting each individual account and the account's balance?
Ledger
A journal provides a
chronological record of all transactions affecting a firm.
The two roles of financial accounting are to:
communicate information to external parties for decision making purposes., measure business activities of the company
Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?
credit common stock and debit to cash
Accounts on the left side of the accounting equation (assets) are increased with a(n) ____, whereas accounts on the right side of the accounting equation are increased with a _____
debit, DR, or debits credit, CR, or credits
Credits increase revenues, whereas debits increase
expenses and dividends
Which of the following contains a list of transactions affecting each account and the account's balance?
general ledger
Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:
issued shares to stockholders
A transaction is initially recorded in the journal, and then subsequently posted to the general ____
ledger
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as . (Enter only one word.
posting
The process of transferring information from the journal to the ledger is referred to as
posting
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.
Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company
provided goods or services to a customer.
Consistent with the _____ recognition principle, companies record revenue at the time goods are provided to customers. (Enter only one word.)
recognition
The purpose of a journal is to
record a chronological listing of every transaction for a company.
Which type of account is increased with a credit?
revenue
Identify the three components of retained earnings
revenues, dividends, expenses
The type of information included in an account includes
the account title. columns for debits and credits.