CHAPTER 2 ACCOUNTING CONCEPT QUESTIONS
Unearned Revenues Revenues Accounts Payable Common Stock
Choose the account(s) below, that would have a normal credit balance. (Check all that apply). -Unearned Revenues -Revenues -Supplies Expense -Accounts Payable -Common Stock
-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. -A company's required debt payments may be greater than its ability to generate money to make those payments.
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.) Multiple select question. -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. -A company's required debt payments may be greater than its ability to generate money to make those payments. -Assessing a company's risk of paying off debt is not required when the company is highly leveraged
-Income statement -Statement of retained earnings -Statement of cash flows
Which of the following financial statements report(s) the financial position of a business over a period of time? (Check all that apply.) -Income statement -Balance sheet -Statement of retained earnings -Statement of cash flows
When an owner invests in a business, the invested amount is recorded in the Common Stock account
Which of the following statements best describes the purpose of the Owner, Capital account?
A trial balance confirms that the sum of debit account balances equals the sum of credit account balances.
Which of the following statements explains what a trial balance is?
-The Common Stock account is used to record investments by the owner. -The Common Stock account is increased on the right side of the T-account. -The Common Stock account is an equity account.
Which of the following statements is (are) correct regarding the Common Stock account? (Check all that apply.) -The Common Stock account is used to record investments by the owner. -The Common Stock account is increased on the right side of the T-account. -The Common Stock account is an equity account. -The Common Stock account is increased on the left side of the T-account. -The Common Stock account is used to record purchases of assets.
-A one-year reporting period is known as the fiscal year. -A reporting period is determined by the business. -A reporting period can be one month, one quarter or one year.
In defining a reporting period, which of the following statements is (are) correct? (Check all that apply.) -A reporting period is used to determine the due date of payables. -A reporting period refers to each day in the calendar year. -A one-year reporting period is known as the fiscal year. -A reporting period is determined by the business. -A reporting period can be one month, one quarter or one year.
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 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. -If one account is credited, then at least one other account must be credited as well. -If one asset account is increased, then another asset account must be decreased in order for the left side of the accounting equation to be balanced. -If total assets are increased, then liabilities only are increased as well.
