accounting ch 2 review

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

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

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

-Checks -Coin -Money orders

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

-Crediting the Common Stock account means to increase it. -Crediting means to enter transactions on the right side of a T-account. -Crediting a liability account will increase it.

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 is reported on the left side of the accounting equation. -Equipment purchases are reported on the balance sheet.

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

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

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

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

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

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

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

-which accounts are being used by a company and their balances at any given time. -increases and decreases in all accounts in a business. -common and unique accounts used by a business.

Match the item on the left with the correct definition on the right 1 creditors 2 liabilities 3 assets 4 expenses

1 Individuals or organizations that have rights to receive payments from a business 2 Claims against the assets of a business 3 Things of value owned by a business 4 The costs of doing business

Match the definition on the left with the term/item on the right. 1 a general ledger 2 journal 3 trial balance 4 chart of accounts

1 It is a collection of all accounts with their activity and balances that exist in a business. 2 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 3 It is a list of each account and its balance at any given time and is used to verify that debits = credits 4 It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account

Match the items on the left with their definition on the right. 1 assets 2 equity 3 revenues 4 liabilities

1 Things of value owned by the business 2 The residual interest in the assets of a business after deducting the business's debts 3 The dollars earned because of services performed or products sold 4 The obligations owed by the business to creditors

Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.

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.

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 item

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 of the following accounts has a normal credit balance? (Check all that apply.)

Accounts payable Common stock Unearned consulting revenue

On Sept 9, Daniels Corporation earns $2,000 by performing consulting services. Their customer said that she would pay next month. Daniels Corporation journalized the transaction as follows, but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like to identify everything that is wrong. (Check all that apply.)

Accounts payable is not involved in this transaction. The Consulting revenue account should be indented, as it is credited. The correct account that should be debited is the Accounts receivable account. Consulting revenue should be listed below the debited account as it is credited.

Which of the following statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.

Transferring entries from the journal to the ledger is called (posting/preparing/journalizing)

posting

An income statement reports:

the revenues minus the expenses incurred by a business

True or false: At the end of the period, the assets will still equal the liabilities plus equity.

true

Which of the following statements is the correct definition of equity?

Equity is the owner's claim on a company's assets.

True or false: Assests are claims (by creditors) against the company.

False; liabilities

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.

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

Net income Total revenues Total expenses

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Select the statement below that best defines prepaid accounts.

Prepaid accounts are assets that represent prepayments of future expenses.

Which of the following accounts has a normal debit balance? (Check all that apply.)

Supplies Accounts receivable Buildings Cash

Which of the following describes a general ledger?

The general ledger is a record containing all accounts used by a company.

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

On Jan. 2, Callie Taylor invests $40,000 into the business in exchange for common stock. She journalized the transaction as follows but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like to identify everything that is wrong. Select all answers which apply.

Common Stock should be listed below Cash The Common Stock account should be indented as it is credited The dollar amount is wrong in the Credit column The Cash account should be listed first

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Common stock and revenues

J. Jackson invested $1,000 in his business in exchange for common stock. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Debit Cash; credit Common stock

Which of the following accounts impact equity? (Check all that apply.)

Dividends Revenue Common Stock 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.

On Jan. 2, Callie Company received a $700 payment from a customer previously billed for services performed. The journal entry to record this transaction would include a Blank 1 of 3 (debit, credit) to the Blank 2 of 3 account and a Blank 3 of 3 (debit, credit) to the Accounts Receivable account.

Blank 1: debit Blank 2: cash Blank 3: credit

L. Lyons started a business and invested $4,000 in exchange for common stock. Illustrate how to record the transaction in the T-accounts by completing the following sentence. The Cash account would be Blank 1 of 4(debited/credited) on the Blank 2 of 4(left/right) side of the T-account and the Common stock account would be Blank 3 of 4(debited/credited) on the Blank 4 of 4 (left/right) side of the T-account.

Blank 1: debited Blank 2: left Blank 3: credited Blank 4: right

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

Building, cash, accounts receivable, supplies

On Nov.1, Lyons Company pays $1000 cash for a 12-month insurance policy. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry

Cash would be credited and listed second Prepaid Insurance would be debited and listed first

On Mar 3, Lyons Company paid dividends of $1,000. Use your knowledge of what a correct journal entry should look like to identify what would be included. (Check all that apply.)

Cash would be credited and listed second. Dividends would be debited and listed first.

Notes receivable is considered a(n) ___ (asset/liability).

asset

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

asset left increased

Analyzing the accounting equation at the end of the month will reveal the following. Select all that apply.

assets = liabilities + equity revenues and expenses will change the equity account

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

assets, expenses

Prepaid accounts are __ (assets/liabilities) that represent prepayments of future expenses and are increased with a __ (debit/credit).

assets; debit

Accounts payable refer to obligations owed Blank 1 of 2 (by/to) the business and are classified as a(n) Blank 2 of 2 (asset/liability/expense) account.

by liability

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

credit increase

To enter transactions on the left side of a T-account means you will Blank 1 of 2 (debit/credit) the account and will cause a(n) Blank 2 of 2 (decrease/increase) in an asset account.

debit increase

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

decreases

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; Land is an asset account.

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; land account not expense

True or false: Assets are claims (by creditors) against the company.

false; liability

To debit an account means to enter transactions on the __ side of a T-account.

left

A trial balance is a(n) (list/balance/chart) Blank 1 of 2 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 Blank 2 of 2account balances. Use one word for each blank.

list credit