Ch.2/Week 2 (part 2)

Choose the statement below that correctly explains a general journal.

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

Which set of accounts below would have a normal debit balance?

Expenses; Owner, Withdrawals; Cash

Which of the following is the best definition of a source document in the accounting process?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system.

Paul's Programming Services provided $1,000 of consulting services on credit. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Debit Accounts Receivable; credit Consulting Revenue.

J. Jackson invested $1,000 in his business. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Debit Cash; credit Owner, Capital.

When entering a transaction into a general journal, the entry would be dated; then the accounts_________ (debited/credited) would be listed first; then the accounts________ (debited/credited) would be listed next.

Debited Credited

Stan Programming Services provided $8,000 of services and received payment immediately. Show how to record this transaction to the T-accounts by selecting the correct answer below.

Enter $8,000 on left side of Cash; enter $8,000 on the right side of Service revenue.

Stan Smith purchased $8,000 of supplies on credit for his company. Show how to record this transaction to the T-accounts by selecting the correct answer below.

Enter $8,000 on left side of the Supplies account; enter $8,000 on the right side of the Accounts payable account.

Which of the following would be included on an income statement? (Check all that apply.)

Total expenses Total revenues Net income

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Total liabilities/Total assets

Which of the following statements is (are) correct regarding a journal? (Check all that apply.)

Transactions are generally entered in chronological order. A journal is used to record business transactions. In a journal, both the debit and credit side of the transaction can be seen.

True or false: The revenue recognition principle states that revenue should be recorded in the period in which it is earned which may or may not be the period in which payment was actually received.

True

S. Sunshine received and paid for a utility bill of $50. Show how to record this transaction to the T-accounts by selecting the correct answer below.

$50 on left side of the Utility expense account; $50 on the right side of the Cash account.

Which of the following statements is accurate regarding the Building account?

A Building asset account is used to record the costs of purchasing a store, office, warehouse or factory.

Choose the account(s) below, that would have a normal credit balance. (Check all that apply).

Accounts Payable Unearned Revenues Owner's capital Revenues

Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.

Which of the following is required information when entering a transaction into a journal? (Check all that apply.)

Date of the transaction Explanation of transaction Credited accounts Debited accounts

Which of the following statements is (are) correct regarding the posting process? (Check all that apply.)

Entries must be posted to the ledger before financial statements are prepared. The posting process creates a link between the ledger and the journal. The posting process does not require detailed explanations in the ledger. Entries are posted as soon as possible.

Which of the following statements is correct regarding expenses.

Expenses are increased on the left side of their T-account because they decrease equity.

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)

Money orders Coins Checks

Which of the following accounts are examples of revenues? (Check all that apply.)

Sales Fees earned Service revenue

Which of the following best and fully describes a general ledger?

The general ledger is a record containing all accounts used by a company.

Which of the following statements is correct?

To debit an account means to enter transactions on the left side of a T-account.

Which of the following statements is (are) correct regarding the effect of debiting or crediting accounts? (Check all that apply.)

To decrease an asset, you would credit it. To reduce Accounts payable, you would debit it To increase the Withdrawals account, you would debit it. To increase an expense account, you would debit it. To reduce Cash, you would credit it.

Which of the following statements best describes the purpose of the Owner, Capital account?

When an owner invests in a business, the invested amount is recorded in the Owner, Capital account.

Notes receivable is considered a(n)_____________ (asset/liability).

asset

An account is a record of increases and ______ in a specific asset, liability, equity, revenue or expense.

decreases

After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) (increase/decrease)_______ in total liabilities or equity.

increase

The correct definition of an "account" includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense.

Which of the following accounts would be considered an asset? (Check all that apply.)

Building Cash Accounts receivable Supplies

Identify which of the following lists include only examples of assets.

Building, cash, accounts receivable

Which of the following would be considered a source document in an accounting system? (Check all that apply.)

Checks Payroll records Purchase order Sales receipt

On Jan. 2, Callie Taylor purchased $300 worth of supplies. She paid $100 immediately, but put the rest on account. The journal entry to record this transaction in Callie Taylor's books would include which of the following? (Check all that apply.)

Credit the Cash account for $100. Debit the Supplies account for $300. Credit Accounts payable for $200.

Since expenses are the costs of doing business and cause equity to__________ (increase/decrease), expenses are increased on the _____________(right/left) side of their T-account.

Decrease Left

Which of the following statements is (are) correct regarding the sides of a T-account? (Check all that apply.)

Liability accounts are increased on the right side. Asset accounts are increased on the left side. The right side is called the credit side. The left side is called the debit side.

Which of the following statements is accurate about the Land account? (Check all that apply.)

The Land account is an asset. The Land account is increased on the left side of its T-account. The Land account is used to record the costs of land purchased by the business.

Which of the following statements is (are) correct regarding the Owner, Capital account? (Check all that apply.)

The Owner, Capital account is an equity account. The Owner, Capital account is used to record investments by the owner. The Owner, Capital account is increased on the right side of the T-account.

Which of the following statements are accurate regarding supplies? (Check all that apply.)

Unused supplies are treated as assets. Supplies are assets until they are used. Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. When supplies are purchased, they are added to the Supplies account.

Equipment is a(n) __________(asset/liability/expense) account. It is reported on the__________ (left/right) side of the accounting equation and is_____________ (increased/decreased) when equipment is purchased.

asset left increased

R&R Programming pays a $900 supply bill that it had received earlier in the month. Illustrate how to record the transaction to the T-accounts by completing the following sentence. Accounts payable would be______ (debited/credited) on the_____ (left/right) side of the T-account, and Cash would be______ (debited/credited) on the______ (left/right) side of the T-account.

debited left credited right

Review each of the following statements to determine which is correct regarding the importance of assessing a company's risk of paying debt. (Check all that apply.)

A company's required debt payments may be greater than its ability to generate money to make those payments. If a company has a lot of debt, they may not be able to afford to take on new debt. A company that finances their assets by borrowing will need to make enough money to pay off the debt.

Which of the following statements explains what a trial balance is?

A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.

Which statement is correct regarding entering transactions into the accounting equation?

After recording a transaction, the total of the right side of the accounting equation must equal the total of the left side of the accounting equation.

Which of the statements below is true regarding the statement of owner's equity?

Both the beginning and ending Capital balances are reported on the statement.

Recall that the Balance Sheet reports the equality of the accounting equation and would include which of the following amounts?

Capital balance at end of period Total Assets Total Liabilities

When preparing a trial balance, there are certain steps that need to be followed. Place the following steps in the correct order.

List each account title and its amount from the general ledger. Compute the total of debit balances and the total of credit balances. Verify that total debit balances equal total credit balances.

Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)

List each account title and its amount from the ledger. Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances.

Recall the required information in a financial statement heading. Rearrange the following line items as they would appear in a heading.

Name of business Name of financial statement Period of time the financial statement covers

Which of the following items is (are) required in the heading of every financial statement? (Check all that apply.)

Name of the business Name of the financial statement Date or period of time covered

Which of the following would be included on a statement of owner's equity? (Check all that apply.)

Owner withdrawals Net income (loss) Capital balance at end of period Owner investments Capital balance at beginning of period

S. Gunner made a $50 payment on account for a previous equipment purchase. Show how this transaction should be entered into T-accounts of S. Gunner, by selecting the correct answer below.

Place $50 on left side of the Accounts payable account; place $50 on the right side of the Cash account.

On Mar 3, L. Lyons received $100 cash in advance of providing catering services to a customer. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry

Unearned Revenue would be credited and listed second Cash would be debited and listed first

The balance sheet reports:

assets, liabilities and the ending capital balance

On Jan. 2, Callie Taylor performed $800 worth of services for a client. The client paid $100 immediately, but promised to pay the balance next month. The journal entry to record this transaction in Callie Taylor's books would be

debit cash $100, debit receivables $700 and credit sales $800

Holt Computer Services purchased $2,000 of new equipment and paid immediately. Illustrate how to record the transaction into T-accounts of Holt Services by completing the following sentence. The Equipment account would be_______ (debited/credited) on the________ (left/right) side of the T-account and the Cash account would be______ (debited/credited) on the_________ (left/right) side of the T-account.

debited left credited right

J. Brown paid his only employee his weekly wages of $400. Show how to record the transaction to the T-accounts by completing the following sentence. The Wages expense account would be________ (debited/credited) on the________ (left/right) side of the T-account, and the Cash account would be_____________ (debited/credited) on the__________ (left/right) side of the T-account.

debited left credited right

The statement of owner's equity reports:

how equity changed over a period of time

A trial balance is a(n) (list/balance/chart)______ of accounts and their balances at a point in time and is used to confirm that the sum of_______ debit account balances equals the sum of account balances. Use one word for each blank.

list credit

Transferring entries from the journal to the ledger is called (posting/preparing/journalizing) _______________

posting

An income statement reports:

the revenues minus the expenses incurred by a business

S. Gunner purchased a piece of equipment costing $6,000. She paid $1,000 immediately and put the rest on account. Show how to record this transaction to the T-accounts by selecting the correct answer below.

$6,000 on left side of the Equipment account; $5,000 on the right side of the Accounts payable account; $1,000 on the right side of the Cash account.

Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to show the effects of one or more transactions.

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

A T-account represents a ledger account. A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction.

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.) Multiple select question.

A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction. A T-account represents a ledger account.

Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.

Match the definition on the left with the term/item on the right. It is a collection of all accounts and balances that exist in a business. It is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred. It is a list of each account and its balance at any given time and is used to verify that debits = credits It is a list of all ledger accounts and includes an identification number assigned to each account

A general ledger A journal A trial balance A chart of accounts

Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)

A liability can be settled by transferring assets or providing products or services to others. A liability is a claim by creditors against the assets of a business. A liability is a debt owed by the business.

Which of the following statements is the correct definition of a liability?

A liability is a claim by a creditor against the assets of a business.

Which of the following statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.

The general ledger can be used to determine which of the following: (Check all answers which apply)

All accounts used by a company and their balances. Common and unique accounts used by a business. Increases and decreases in all accounts in a business.

Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders

Select the statements below that are correct in regards to entering transactions in a journal. (Check all that apply.)

Credited accounts should be indented. Leave one blank line between each completed journal entry. Total dollar amount of debits must equal the total dollar amount of credits.

Which of the selections below includes all of the required information to be entered in a journal?

Date of transaction, explanation of transaction, debited and credited accounts, dollar amounts of debits and credits

On Jan. 2, Callie Taylor received a $700 payment from a customer previously billed for services performed. The journal entry to record this transaction would include a ________(debit, credit) to the ______ account and a_______ (debit, credit) to the Accounts Receivable

Debit Cash Credit

The account title is shown at the top of a T-account. The left side of a T-account is called the_______ side, and the right side is called the_______ side.

Debit Credit

To enter transactions on the left side of a T-account means you will _______(debit/credit) the account and will cause a(n) _________(decrease/increase) in an asset account.

Debit Increase

You are entering a transaction in the journal. Place the following steps in the order that they would be entered in the journal.

Enter date of transaction in date column Enter name of account(s) debited and their amount(s) Enter name of account(s) credited and their amount(s) Enter explanation

Which of the following is a correct statement regarding the posting process?

Entries must be posted to the ledger before financial statements are prepared.

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment is reported on the left side of the accounting equation. Equipment is an asset. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. Equipment purchases are reported on the balance sheet.

Which of the following statements is correct regarding the effect of debits and credits in accounts?

Expenses reduce equity, so to increase an expense account you would debit it.

Assets are claims by creditors against the company.

False

True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.

False

Revenues cause equity to _______(decrease/increase) and they are increased on the______ (left/right) side of the T-account.

Increase Right

Revenues cause equity to ______________ (decrease/increase) and they are increased on the ____________(left/right) side of the T-account

Increase Right

Match the item on the left with the correct definition on the right Creditors Liabilities Assets Expenses

Individuals or organizations that have rights to receive payments from a business. Claims against the assets of a business. Things of value owned by a business. The costs of providing products and services.

From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

It is the promise of another entity to pay a specific sum of money on a specified future date. Another name for a note receivable is a promissory note. Notes receivable is classified as an asset.

Accounts payable refer to promises to pay later by the business and are classified as a(n) ___________(asset/liability/expense) account.

Liability

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Owner's capital and revenues

Which of the following statements is the correct definition of owner's equity?

Owner's equity is the owner's claim on a company's assets.

Which of the following accounts impact equity? (Check all that apply.)

Owner, Capital Owner, Withdrawal Expenses Revenue

Jeff, the owner of a business, invests an additional $100 into his business from his personal checking account. How would this affect the equity of his business?

Owner, Capital would be increased and total equity would also increase.

Simon, the owner of a business, invests $10,000 in his new business, Simon's Sports. How would this affect the equity of a business? Multiple choice question.

Owner, Capital would be increased, so equity is increased.

S. Gunner received $300 cash from a client that had been billed earlier in the month. Show how to record this transaction into T-accounts by selecting the correct answer below.

Place $300 on left side of the Cash account; place $300 on the right side of the Accounts receivable account.

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Which of the following statements is correct about prepaid expenses?

Prepaid expenses are also called prepaid accounts and are considered assets.

Which of the following are examples of prepaid (expense) accounts? (Check all that apply.)

Prepaid rent Prepaid insurance

Which of the following lists of items contain only examples of prepaid (expense) accounts?

Prepaid rent, prepaid insurance

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, salaries expense, insurance expense.

Match the items on the left with their definition on the right. Assets Owner's equity Revenues Liabilities

Resources owned or controlled by the business. The residual interest in the assets of a business after deducting the business's debts. Sales of products and services to customers. The obligations owed by the business to creditors.

Which of the following statements about revenues is correct?

Revenues cause equity to increase, and they are increased on the right side of the T-account.

The business earns $700 of consulting revenue. How would these earnings affect the total equity of a business?

Revenues increase, so total equity is increased.

The business earns $2,800 cash for services performed. How would this transaction affect the total equity of a business?

Revenues would be increased, so equity is increased.

Which of the following accounts are examples of expenses? (Check all that apply.)

Supplies expense Rent expense

On Nov.1, L. Lyons pays $2,400 cash for supplies. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Supplies would be debited, and Cash would be credited.

Which of the following statements are correct regarding how the financial statements are linked? (Check all that apply.)

The ending balance in the Owner, Capital account is carried to the balance sheet. Net Income from the income statement is carried to the statement of owner's equity.

The Building account is a(n)______________ (asset/liability/expense) account and is reported on the_____________ (left/right) side of the accounting equation.

asset left

When financial statements are prepared, unexpired prepaid accounts are recorded as _________ (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) __________ (expense/asset/liability).

assets expense

Supplies are____________ (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as_____________ (assets/expenses/liabilities).

assets expenses

Holt Computer Services received $200 from a customer that it had billed earlier in the month. Illustrate how to record the transaction to the T-accounts by completing the following sentence. Accounts receivable would be______ (debited/credited) on the_____ (left/right) side of the T-account, and Cash would be_____ (debited/credited) on the_________ (left/right) side of the T-account.

credited right debited left

J. Brown provided services to a customer and immediately collected $1,900 cash. Show how to record the transaction to the T-accounts by completing the following sentence. Service Revenue would be________ (debited/credited) on the_________ (left,/right) side of the T-account, and Cash would be___________ (debited/credited) on the__________ (left/right) side of the T-account.

credited right debited left

J. Brown purchased $900 of supplies on credit. Illustrate how to record the transaction to T-accounts by completing the following sentence. Accounts payable would be________ (debited,/credited) on the________ (left/right) side of the T-account, and Supplies would be________ (debited/credited) on the__________ (left/right) side of the T-account.

credited right debited left

L. Lyons started a business and invested $4,000. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be_____ (debited/credited) on the _______ (left/right) side of the T-account and the Owner, Capital account would be________ (debited/credited) on the________ (left/right) side of the T-account.

debited left credited right

P. Butter purchased $300 of supplies for cash. Illustrate how to record the transaction into T-accounts by completing the following sentence. The Supplies account would be______ (debited/credited) on the______ (left/right) side of the T-account and the Cash account would be_______ (debited/credited) on the______ (left/right) side of the T-account.

debited left credited right