ACCT2301 Smartbook 2

Which of the following are accurate statements regarding how to report or treat prepaid accounts?

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

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 credit balances 3. Verify that total debit balances equal total credit balances

Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to understand the effects of transactions.

Which of the following statements is (are) correct regarding a T-account?

A T-account represents a ledger account. A T-account may be used as a tool to visualize the effects of a transaction. A T-account will show the debit and credit effects of transactions.

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 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 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?

Accounts payable Unearned consulting revenue Common stock

Which of the following accounts is an asset?

Accounts receivable Building Cash Supplies

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.

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

Building, Cash, Accounts receivable

Which of the following accounts has a normal debit balance?

Cash Supplies Buildings Accounts receivable

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

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. Multiple choice question.

Debit Cash; credit Common stock

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

general ledger

It is a collection of all accounts with their activity and balances that exist in a business.

Which of the following statements is the best definition of the Chart of Accounts? Multiple choice question.

It is a list of all ledger accounts in a business and includes an identification number assigned to each account.

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

trial balance

It is a list of each account and its balance at any given time and is used to verify that debits = credits

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

Money orders Checks Coins

Which of the following would be included on an income statement?

Net income Total revenues Total expenses

Given the descriptions below, which are true regarding notes receivable? Multiple select question.

Notes receivable is classified as an asset. 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.

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Which of the following statements is correct about prepaid expenses?

Prepaid expenses are also called prepaid accounts and are considered assets.

Which of the following would be considered a source document in an accounting system?

Sales receipt Payroll records Purchase order Checks

Which of the following describes a general ledger?

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

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. Compute the total of debit balances and the total of credit balances. List each account title and its amount from the ledger.

Notes receivable are a(n)

asset

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

Prepaid accounts are (assets/liabilities) that represent prepayments of future expenses and are increased on the (right/left) side of the accounting equation.

assets, left

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

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

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 (debited/credited) on the (left/right) side of the T-account and the Common stock 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 ? in a specific asset, liability, equity, revenue or expense.

decreases

Assets are claims (by creditors) against the company.

false

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 the credit account balances.

list

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

posting

An income statement reports:

the revenues minus the expenses incurred by a business

At the end of the period, the assets will still equal the liabilities plus equity.

true