Financial Chapter 2

Which of the following statements are true? I. A journal provides a chronological record of a transaction. II. A journal entry contains the complete effect of a transaction. III. The first step in preparing a journal entry involves analyzing the transaction.

All of these choices are correct

The effects of paying salaries for the current period are to:

decrease assets and decrease stockholders' equity

The effects of purchasing inventory on credit are to:

increase assets and increase liabilities

Which of the following statements are true? I. Debits represent decreases and credits represent increases. II. Debits must always equal credits. III. Assets have normal debit balances while liabilities and stockholders' equity have normal credit balances.

II & III

Which of the following is not a characteristic of useful information?

a. Conservatism b. Timeliness c. Faithful representation d. Comparability A

Which of the following is not an assumption that underlies accounting?

a. Historical cost b. Going concern c. Economic entity d. Time-period A

Which of the following is not a benefit derived from the conceptual framework?

a. Supports the development of a consistent set of accounting standards. b. Provides a logical structure to aid in the understanding of complex accounting standards. c. Supports the objective of providing information useful for making business and economic decisions. d. Provides specific guidance on how transactions should be recorded. d

Which of the following statements is false?

a. The amount in an account at any time is called the balance of the account. b. All T-accounts have both a debit and a credit side. c. Transactions are frequently analyzed using a T-account. d. The left side of a T-account is called the credit side. D

Which principle requires that expenses be recorded and reported in the same period as the revenue that it helped generate?

expense recognition

Debits will:

increase assets, expenses, and dividends.

Posting

involves transferring the information in journal entries to the general ledger.

A trial balance:

lists all accounts and their balances.