Practice Ch 2

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

The T-account for Accounts payable had 4 transactions entered into it. It was increased by $300 and by $100 and decreased by $50 and by $150, respectively. Its balance at the end of the period would be a (debit/credit) balance of $.

Credit $200

To enter transactions on the right side of a T-account means you will (blank) (debit/credit) the account and will cause a(n) (blank) (decrease/increase) in a liability account.

Credit Increase

True or false: 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

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

Sales receipt Checks Payroll records Purchase order

An income statement reports:

the revenues minus the expenses incurred by a business

Illustrate how the financial statements are linked by placing them in the correct order of preparation. Instructions Choice 1 of 3. Balance sheet toggle button Balance sheet Choice 2 of 3. Statement of owner's equity toggle button Statement of owner's equity Choice 3 of 3. Income statement toggle button Income statement

1. Income Statement 2. Statement of Owner's Equity 3. Balance Sheet

Illustrate how the financial statements are linked by placing them in the correct order of preparation.

1 income statement 2 statement of owners equity 3 balance sheet

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

Asset Left Increased

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

Building Supplies Cash Accounts receivable

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

Building, cash, accounts receivable

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. Listen to the complete question

Debited, Left Credited, Right

Select the statements that are true regarding debiting and crediting. (Check all that apply.)

For an account where a debit is an increase, the credit is a decrease. A debit can increase an expense account. A debit or a credit can increase or decrease an account, depending on the account. A credit will always decrease an asset account.

The balance sheet reports:

assets, liabilities and the ending capital balance

Match the definition on the left with the term/item on the right. Instructions

A General Ledger - It is a collection of all accounts with their activity and balances that exist in a business. matches A Journal - 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 matches A trial balance - It is a list of each account and its balance at any given time and is used to verify that debits = credits matches 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 matches

Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to understand 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 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 correct in regards to debiting and crediting an account?

A debit or a credit can increase an account, depending on what kind of account it is.

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

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

A liability is a debt owed by the business. 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.

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.

Prepaid accounts are (assets/liabilities) (blank) that represent prepayments of future expenses and are increased with a (debit/credit)(blank). Listen to the complete question Need help? Review these con

Assets Debit

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

Assets Expenses

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

Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment is an asset. Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation.

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

Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment is reported on the left side of the accounting equation. Equipment purchases are reported on the balance sheet. Equipment is an asset.

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.

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

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

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

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

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 are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.)

The unexpired portion of prepaid accounts are treated as assets. The expired portion of prepaid accounts is reported on the income statement as an expense. Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense.

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

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.

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

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

Notes receivable is considered a(n) (asset/liability). Listen to the complete

Asset

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

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

Decreases

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

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

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

Total Liabilities Capital balance at end of period Total Assets

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

Total revenues Net income Total expenses

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

Verify that the total debit balances equals the total credit balances. List each account title and its amount from the ledger. Compute the total of debit balances and the total of credit balances. If an account has a zero balance, it may be omitted entirely.

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

1. List each account title and its amount from the general ledger. 2. Compute the total of debit balances and the total of crdeit balances. 3. Verify that total balances equal total credit balances.

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 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.

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

Checks Money orders Coins

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

Coins Money orders Checks

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

Crediting can be abbreviated "Cr". Crediting a liability account will increase it. Crediting the Owner, Capital account means to increase it. Crediting means to enter transactions on the right side of a T-account.

The T- account for Cash had 3 transactions entered into it. It was increased by $400 and decreased by $100 and by $30, respectively. Its balance at the end of the period would be a (blank) (debit/credit) balance of $(blank).

Debit $270

The T- account for Cash had 3 transactions entered into it. It was increased by $400 and decreased by $100 and by $30, respectively. Its balance at the end of the period would be a (debit/credit) balance of $.

Debit $270

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

Debit Increase

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.

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/assets).

Increase Equity

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

Increases and decreases in all accounts in a business. Which accounts are being used by a company and their balances at any given time. Common and unique accounts used by a business.

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.

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

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

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

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

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