accy chapter 2

Transactions are: initially posted to a ledger and then recorded in a journal. initially listed in the chart of accounts and then posted to a ledger. initially listed in the chart of accounts and then posted to a ledger. initially recorded in a journal and then listed in the chart of accounts.

initially recorded in a journal and then posted to a ledger.

Which of the following groups of accounts would all be closed in the year-end closing process? -Interest Income, Cost of Goods Sold, Dividends, and Gain on Sale of Land -Loss on Sale of Equipment, Service Revenue, Notes Payable, and Rent Expense -Dividends, Land, Depreciation Expense, and Sales -Wages Expense, Accounts Receivable, Sales, and Dividends

interest Income, Cost of Goods Sold, Dividends, and Gain on Sale of Land

Accounts are summarized in financial Blank 1 of 2 (statements/entities/transactions), whereas Blank 2 of 2 (statements/entities/transactions) are summarized in accounts.

statements transactions

Transactions are summarized in: The entity's accounts. The notes for the financial statements. None of these. The independent auditor's opinion letter.

the entities accounts

Under accrual accounting, year-end adjustments are made: (Select all that apply). -because revenue receipts may occur before or after the event that causes revenue recognition. -to ensure that expenses are recognized in the year in which they are incurred.

-because revenue receipts may occur before or after the event that causes revenue recognition.

Transactions: -involve the selection of alternative methods of reflecting the effects of certain accounts -are economic interchanges between entities -are the starting point in the accounting process that ends with the preparation of financial statements

-are economic interchanges between entities -are the starting point in the accounting process that ends with the preparation of financial statements

Transactions: -are procedures for sorting, classifying, and processing accounting information -can be seen as the bricks that build financial statements -are summarized in accounts, and accounts are further summarized in financial statements

-can be seen as the bricks that build financial statements -are summarized in accounts, and accounts are further summarized in financial statements

When using the horizontal model for a transaction that affects both the balance sheet and the income statement, the balance sheet will balance when the: -net income for the year is greater than total liabilities. -income statement effect on stockholders' equity is considered. -net income for the year plus total assets is greater than total liabilities. -revenues minus the expenses from the income statement equal zero.

-income statement effect on stockholders' equity is considered.

Stockholders' equity accounts: -increase with debit entries -normally have a debit balance -normally have a credit balance -decrease with credit entries -decrease with debit entries -increase with credit entries

-normally have a credit balance -decrease with debit entries -increase with credit entries

Under accrual accounting, year-end adjustments are made: (Select all that apply). -to ensure that revenues are recognized in the year in which they are incurred. -to ensure that expenses are recognized in the year in which they are incurred. -because revenue receipts may occur before or after the event that causes revenue recognition.

-to ensure that expenses are recognized in the year in which they are incurred. -because revenue receipts may occur before or after the event that causes revenue recognition.

The time frame associated with an income statement is: a function of the information included in it. a point in time in the past. a past period of time. a future period of time.

a past period of time

If debits equal credits, then: -liabilities will equal the sum of assets and net income. -assets will equal the sum of liabilities and stockholders' equity. -assets will equal the sum of liabilities and retained earnings. -net income minus dividends will be equal to total assets.

assets will equal the sum of liabilities and stockholders' equity.

Under accrual accounting, year-end adjustments are made: (Select all that apply). -because the cash disbursement for expenses may occur before or after the event that causes expense recognition. -to ensure that expenses are recognized in the year in which they are earned. -to ensure that revenues are recognized in the year in which they are earned.

because the cash disbursement for expenses may occur before or after the event that causes expense recognition.

Credit entries: -increase asset and stockholders' equity accounts and decrease liability accounts. -increase asset accounts and decrease liability and stockholders' equity accounts. -increase asset and liability accounts and decrease stockholders' equity accounts. -decrease asset accounts and increase liability and stockholders' equity accounts.

decrease asset accounts and increase liability and stockholders' equity accounts.

In bookkeeping and accounting, debit means Blank , and credit means Blank , and nothing more.

left right

When using the horizontal model, the arrow from net income to stockholders' equity indicates that: -net income affects retained earnings, which is a component of stockholders' equity. -both the income statement and the balance sheet are overstated by the amount of net income. -net income for any given year must always be greater than the amount of dividend paid to stockholders. -net income affects paid-in capital, which is a component of stockholders' equity.

net income affects retained earnings, which is a component of stockholders' equity.

In the closing process, all income statement accounts (revenues, expenses, gains, and losses) and dividends are closed. What is the name of the account in which all the aforementioned accounts are closed into?

retained earnings