accounting 101 chapter 2
Determine the dual effect of business events on the accounting equation
Analyze transactions
Pluto Inc. borrows $3,000 from Second National Bank by signing a promissory note. Recording this transaction will include which of the following?
Credit note payable Debit cash
Carnival Company issues common stock to investors for $50,000. Which of the following is used to record this transaction?
Debit cash; credit common stock.
Record of all transactions affecting a company's
Journal
computerized system
Journal entries are instantly posted to the general ledger
Manual system
Journal entries are posted periodically to the general ledger
Posting
Transfer balances from journal to general ledger
A journal provides a
chronological record of all transactions affecting a firm.
The two components of stockholders' equity are
common stock and retained earnings
accounts payable equals
credit
common stock equal
credit
retained earnings equal
credit
service revenue equals
credit
The term debit means to place the entry on the __and side of the account, and the term credit means to place the entry on the ____ hand side of the account.
left, right
The two roles of financial accounting are to:
measure business activities of the company and communicate those measurements to external parties for decision making purposes
The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as
posting
The purpose of a general ledger is to
provide in a single location the list of transactions affecting each account and the account's balance.
Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company
provided goods or services to a customer.
Consistent with the ___recognition principle, companies record revenue at the time goods are provided to customers
revenue
Which type of account is increased with a credit?
revenue
What are the three components of retained earnings?
revenues, expenses and dividends
The type of information included in an account includes
the account title. columns for debits and credits
Which contains a list of transactions affecting each account and the account's balance?
General ledger
Trial Balance
a list of accounts and their balances at a given time
account
a summary of the effects of all transactions related to a particular item over a period of time
A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company.
account; general ledger
accounts receivable equal
debit
cash equals
debit
dividends equal
debit
equipment equals
debit
salaries expense equals
debit
utilities expense equal
debit
An account should have an account title, account number, a place for the date of the transaction, and two columns for
debits and credits.
Credits increase revenues, whereas debits increase
expenses and dividends.
Accounts receivable are assets which represent
the amounts owed by customers.
What are external transactions?
transactions that are separate from the business. Such as: selling products to a customer, purchasing supplies from a vendor, paying salaries to an employee, borrowing money from a bank
A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n)
trial balance
