chapter 2 smartbook

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

a general ledger

Choose the accounts below, that would have a normal credit balance

common stock accounts payable interest payable unearned revenue revenues

Which of the following accounts is an equity?

common stock dividends revenues expenses

Given the following information for Jackson's Boots, calculate its Debt Ratio for the current year. $ in Thousands 20X2 Total assets. $250 Total liabilities. $100 Total equity. $150

.40

Which of the following statements is the best definition of the Chart of Accounts?

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

Which of the following describes a general ledger?

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

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Total liabilities/Total assets

Which of the following accounts is a liability?

accounts payable notes payable accrued liabilities unearned revenue

Which of the following financial statements report(s) the financial position of a business at a point in time.

balance sheet

Which of the following items would be considered "cash" and reflected in a company's Cash account?

coins checks money orders checking accounts

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

decreases

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.

field 1 debited field 2 left field 3 credited field 4 right

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 ____________ account balances. Use one word for each blank.

field 1: list field 2: credit

Which of the following financial statements report(s) the financial position of a business over a period of time?

income statement statement of retained earnings statement of cash flow

After entering a transaction into the accounting equation, an increase in total assets can be accompanied by a(n) (increase/decrease) ______ in total liabilities or equity.

increase

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

posting

Choose the accounts below, that would have a normal Debit balance

prepaid rent note receivable accounts receivable equipment land prepaid insurance dividends utilities expense supplies expense

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

sales receipt checks purchase orders bills from suppliers payroll records bank statements

The general ledger can be used to determine which of the following

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.

Review each of the following statements to determine which is correct regarding the importance of assessing a company's risk of paying debt.

A company's required debt payments may be greater than its ability to generate money to make those payments. If a company has a lot of debt, they may not be able to afford to take on new debt. A company that finances their assets by borrowing will need to make enough money to pay off the debt.

In defining a reporting period, which of the following statements is (are) correct?

A one-year reporting period is known as the fiscal year. A reporting period is determined by the business. A reporting period can be one month, one quarter or one year.

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 set of accounts below would have a normal debit balance?

Expenses; Dividends; Cash

Assets are claims (by creditors) against the company.

False because this is a liability

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 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

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 ledger) in the trial balance 2. compute the total of debit balances and the total credit balances 3. verify total debit balances equal total credit balances

Which of the following statements correctly explains how to prepare a trial balance?

1. list each account title and its amount (from the ledger) in the trial balance 2. compute the total of debit balances and the total credit balances 3. verify total debit balances equal total credit balances

Which of the following statements is (are) correct regarding a T-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. A T-account represents a ledger account.

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 statement is correct regarding entering transactions into the accounting equation?

After recording a transaction, the total of the right side of the accounting equation must equal the total of the left side of the accounting equation

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.

Debit Cash; credit Common stock

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

a chart of accounts

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

a journal

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

a trial balance

Which of the following accounts is an asset?

cash accounts receivable notes receivable inventory prepaid accounts supplies equipment buildings land