ACCT 2301 Chapter 2

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

-Account -General ledger

Computerized system ---> Manual system---->

-Choice, Journal entries are instantly posted to the general ledger Journal entries are instantly posted to the general ledger -Choice, Journal entries are posted periodically to the general ledger Journal entries are posted periodically to the general ledger

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

A. The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes. B. The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.

The accounting equation is:

Assets = Liabilities + Owner's Equity

Which of the following are external transactions?

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

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.

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

False

The term debit means increase, and the term credit means decrease.

False(Reason: Debit means left; credit means right. Some accounts you debit to increase; other accounts you credit to increase.)

Which of the following represents a common advantage of a computerized accounting system?

Journal entries are instantly posted to the ledger

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

Ledger

A journal provides a

chronological record of all transactions affecting a firm.

The two roles of financial accounting are to:

communicate information to external parties for decision making purposes., measure business activities of the company

Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following?

credit common stock and debit to cash

Accounts on the left side of the accounting equation (assets) are increased with a(n) ____, whereas accounts on the right side of the accounting equation are increased with a _____

debit, DR, or debits credit, CR, or credits

Credits increase revenues, whereas debits increase

expenses and dividends

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

general ledger

Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick:

issued shares to stockholders

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

ledger

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as . (Enter only one word.

posting

The process of transferring information from the journal to the 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. (Enter only one word.)

recognition

The purpose of a journal is to

record a chronological listing of every transaction for a company.

Which type of account is increased with a credit?

revenue

Identify the three components of retained earnings

revenues, dividends, expenses

The type of information included in an account includes

the account title. columns for debits and credits.