Accounting CH2

Which of the following represents a common advantage of a computerized accounting system? Prevents errors in the preparation of journal entries Journal entries are instantly posted to the ledger Ensures accuracy of all the accounts in the general ledger

Journal entries are instantly posted to the ledger

Which type of account is increased with a debit? Revenue Expense Liability Stockholders' Equity

Expense

What are the three components of retained earnings? Assets, liabilities, and stockholders' equity Common stock, net income, and notes payable Revenues, expenses, and dividends Assets, liabilities, and income

Revenues, expenses, and dividends

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company

account, general ledger

A journal provides a listing of all accounts used by a firm. summary of all the debits and credits made during the period. chronological record of all transactions affecting a firm.

chronological record of all transactions affecting a firm.

The two components of stockholders' equity are assets and liabilities. retained earnings and notes payable. revenues and dividends. common stock and retained earnings.

common stock and retained earnings

A transaction is initially recorded in the journal, and then subsequently posted to the general

ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance? Ledger Account Journal

ledger

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as --------

posting

The process of transferring information from the journal to the ledger is referred to as preparing journal entries. transaction analysis. posting. preparing adjustments.

posting

Which of the following are stockholder equity accounts? Inventory Retained earnings Accounts receivable Common stock Notes payable

Retained earnings Common stock

The two roles of financial accounting are to: measure business activities of the company. measure and report results to taxing authorities. communicate information to external parties for decision making purposes. report cost accounting information for internal decisions.

-measure business activities of the company -communicate information to external parties for decision making

The accounting equation is: Assets = Liabilities - Stockholders' Equity Assets + Liabilities = Stockholders' Equity Assets = Liabilities + Stockholders' Equity Assets - Liabilities = Stockholders' Equity - Liabilities

Assets = Liabilities + Stockholders' Equity

True or false: A ledger provides a chronological record of all transactions affecting the firm.

False

Which of the following are external transactions? Purchasing inventory from suppliers Using supplies purchased last month Paying salaries to employees Borrowing money from the bank

Purchasing inventory from suppliers Paying salaries to employees Borrowing money from the bank

Which of the following is an external transaction? Using supplies on hand Purchasing supplies from a vendor Earning revenues after cash is received

Purchasing supplies from a vendor

Accounts on the left side of the accounting equation (assets) are increased with a(n)-------- to the account, whereas accounts on the right side of the accounting equation are increased with a(n) -------- .

debit credit

An account should have an account title, account number, a place for the date of the transaction, and two columns for closing and post-closing. revenues and expenses. debits and credits. assets and liabilities.

debits and credits

True or false: The term debit means increase, and the term credit means decrease

false

True or false: The two functions of financial accounting are to measure business activities and prepare tax returns

false

Which of the following contains a list of transactions affecting each account and the account's balance? Account General ledger General journal

general ledger

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. -record all transactions for a particular item. -record a chronological listing of the accounts used by a particular company.

provide in a single location the list of transactions affecting each account and the account's balance.

The purpose of a journal is to record a chronological listing of every transaction for a company. record all transactions for a particular item. maintain a balance for each account.

record a chronological listing of every transaction for a company.

Which type of account is increased with a credit? Revenue Dividend Asset Expense

revenue

The types of accounts which affect retained earnings are assets. dividends. revenues. expenses. liabilities.

revenues expenses dividends

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