Financial Accounting Chapter 2

If cash is received from customers in payment for products or services that have not yet been delivered to the customers, the business would record the cash receipt as:

A debit to cash and a credit to an unearned revenue account.

A record of the increases and decreases in a specific account is a(n):

Account

Spafford Services, Inc. provides services to clients. On May 1, a client prepaid Spafford Services $65,000 for 6-months services in advance. Spafford Services' general journal entry to record this transaction will include a:

Credit to Unearned Management Fees for $65,000.

Paul's Landscaping paid $700 on account for supplies purchased in the prior month. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Debit Accounts payable, $700; credit Cash, $700.

A law firm collected $3,000 on account for work performed in the previous month. Which of the following general journal entries will the firm make to record this transaction?

Debit Cash, $3,000; credit Accounts Receivable, $3,000.

Paul's Landscaping purchased $510 of office supplies on credit. The company's policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Paul's Landscaping make to record this transaction?

Debit Office supplies, $510; credit Accounts payable, $510.

Which of the following is a true statement about debits and credits?

Debit is on the left side and credit is on the right side of an account.

The process of recording transaction in a journal is called:

Journalizing

Why are posting references entered in the journal when entries are posted to the ledger accounts?

So we will know that the entry has been posted.

Correctly identify steps 3 and 4 of the accounting process:

Step 3: record transactions into the journal; Step 4: post entries into the ledger.

Which of the following statements are true about the general ledger?

The general ledger contains all of the accounts that a company uses, along with detail of the balances in those accounts.

Which of the following is a true statement concerning account titles:

There is a small range in account titles regardless of type of company.

The first step in the processing of a transaction is to analyze the transaction and source documents.

True

A business uses a credit to record:

A decrease in an asset account

Unearned revenues refer to a(n):

Liability that is settled in the future when a company delivers its products or services.