Financial & Managerial Accounting Chapter 2

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

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.) Multiple select question. 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. A T-account reflects whether a transaction was posted correctly.

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 of the following statements is (are) correct regarding the definition of a liability? Multiple select question. A liability is a thing of value owned by the business and is increased on the left side of a T-account. A liability can be settled by transferring assets or providing products or services to others. A liability is a debt owed by the business. A liability is an asset waiting to be received by a business. 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. A liability is a claim by creditors against the assets of a business.

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 is a debt owed by the business. A liability can be settled by transferring assets or providing products or services to others. A liability is a thing of value owned by the business and is increased on the left side of a T-account. A liability is an asset waiting to be received by a business.

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

The correct definition of an "account" includes which?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item

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.

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 Decreased

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

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

Assets Debits

When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).

Assets Expense

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

Assets Expenses

Which of the following formulas is correct in depicting the expanded accounting equation? Assets + Liabilities = Common stock - Dividends + Revenues - Expenses Assets = Liabilities + Common stock + Dividends - Revenues + Expenses Assets = Liabilities - Common stock - Dividends + Revenues + Expenses Assets = Liabilities + Common stock - Dividends + Revenues - Expenses

Assets = Liabilities + Common stock - Dividends + Revenues - Expenses

Which of the following statements is the best definition of an asset? Assets are claims against the company. Assets are the distributions to the owners of a company. Assets represent the owner's claims against a company. Assets are resources owned or controlled by a company and that have expected future benefits.

Assets are resources owned or controlled by a company and that have expected future benefits.

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

By, Liability

Which of the following accounts would be considered an asset? Multiple select question. Cash Supplies Accounts receivable Accounts payable Owner's capital Building

Cash Supplies Accounts receivable Building

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.) Multiple select question. Notes Receivable Coins Checks Money orders Prepaid Insurance

Coins Checks Money orders

Which of the following statements about the Dividends account is (are) correct? (Check all that apply.) Dividends is increased by an owner investments. Dividends is increased when assets are paid to the owners. Dividends decrease equity. Dividends is used to record distributions of assets to the owners of a business.

Dividends is increased when assets are paid to the owners. Dividends decrease equity. Dividends is used to record distributions of assets to the owners of a business.

Which of the following statements about the Dividends account is (are) correct? (Check all that apply.) Multiple select question. Dividends is increased when assets are paid to the owners. Dividends is used to record distributions of assets to the owners of a business. Dividends is increased by an owner investments. Dividends decrease equity.

Dividends is increased when assets are paid to the owners. Dividends is used to record distributions of assets to the owners of a business. Dividends decrease equity.

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.) Multiple select question. Equipment purchases are expensed, in their entirety, in the period in which they occur. Equipment is an asset. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. Equipment is reported on the left side of the accounting equation. Equipment purchases are reported on the balance sheet.

Equipment is an asset. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense. Equipment is reported on the left side of the accounting equation. Equipment purchases are reported on the balance sheet.

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

False

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

General Ledger

Which of the following statements is the best definition of the Chart of Accounts? It is a book of original entry that includes a chronological record of all transactions that have occurred within a business. It is a list of each account and its balance at any given time. It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account. It is a collection of all accounts with their activity and the balances that exist in a business.

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 statements is (are) correct regarding the sides of a T-account? (Check all that apply.) Multiple select question. The left side is called the credit side. Liability accounts will be increased on the right side. The right side is called the credit side. Liability accounts will be increased on the left side. The left side is called the debit side. Asset accounts will be increased on the right side. Asset accounts will be increased on the left side.

Liability accounts will be increased on the right side. The right side is called the credit side. The left side is called the debit side. Asset accounts will be increased on the left side.

Which of the following are examples of prepaid (expense) accounts? (Check all that apply.) Multiple select question. Prepaid buildings Prepaid rent Prepaid insurance Prepaid accounts payable Prepaid dividends

Prepaid Rent Prepaid Insurance

Which of the following statements is correct about prepaid accounts

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

Which of the following statements is correct about prepaid accounts Prepaid accounts are current expense accounts and are reported on the income statement. Prepaid accounts are also called prepaid expenses and are considered assets. Prepaid accounts are also called prepaid liabilities and are classified as liabilities. Prepaid accounts are another name for accounts receivable and are reported as an asset.

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

Which of the following are examples of prepaid (expense) accounts? (Check all that apply.) Prepaid insurance Prepaid buildings Prepaid rent Prepaid dividends Prepaid accounts payable

Prepaid insurance Prepaid rent

Which of the following statements about revenues is correct? Revenues cause equity to decrease, and they are increased on the right side of the accounting equation. Revenues cause equity to increase, and they are reported on the left side of the accounting equation. Revenues cause equity to increase, and they are increased on the right side of the accounting equation. Revenues cause equity to increase, and they are increased on the left side of the accounting equation.

Revenues cause equity to increase, and they are increased on the right side of the accounting equation.

Revenues

Sales of products and services to customers

Which of the following accounts are examples of expenses? (Check all that apply.) Supplies expense Dividends Accounts payable Rent expense

Supplies expense Rent expense

Equity

The residual interest in the assets of a business after deducting the business's debts

Which of the following statements is correct? To debit an account means to enter transactions in a book of original entry in chronological order. A debit will increase a liability account. To debit an account means to enter transactions on the left side of a T-account. To debit an account means to enter transactions on the right side of a T-account.

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

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

Trial Balance

Which of the following statements is (are) correct regarding unearned revenues? (Check all that apply.) Multiple select question. Unearned revenues refer to assets which have yet to be billed to customers for services performed by the business. Unearned revenues are amounts owed by customers for services performed. Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service.

Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service.

Which of the following statements is (are) correct regarding unearned revenues? (Check all that apply.) Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service. Unearned revenues refer to assets which have yet to be billed to customers for services performed by the business. Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. Unearned revenues are amounts owed by customers for services performed

Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service. Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service.

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

assets debit

Enter one word for each blank. The expanded accounting equation is: ____=____+ common stock+____ - ____- dividends

assets liabilities or liability revenues or revenue expenses or expense

The account title is shown at the top of a T-account. The left side of a T-account is called the _____, side, and the right side is called the side ______

debit credit

Since expenses are the costs of doing business and cause equity to _____ (increase/decrease), expenses are increased on the (right/left) side of their T-account.

decrease left

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

decreases

The Dividends account is used to record dividends ________ (investments/dividends/expenses/revenues) paid to the owners and has a ______ (positive/negative) impact on equity.

dividends negative

Revenues cause equity to (decrease/increase) and they are increased on the (left/right) side of the T-account.

increase right

Accrued liabilities are amounts owed that are not yet

paid

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. common and unique accounts used by a business. a complete record of each transaction in one account. increases and decreases in all accounts in a business.

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

Which of the following statements is the correct definition of a liability? Multiple choice question. A liability is a claim against a customer who is delinquent in paying their bill. A liability is recorded when money is earned by the business. A liability is a claim by a creditor against the assets of a business. A liability is a thing of value owned by a business.

A liability is a claim by a creditor against the assets of a business.

Which of the following statements is the correct definition of a liability? Multiple choice question. A liability is a claim by a creditor against the assets of a business. A liability is recorded when money is earned by the business. A liability is a claim against a customer who is delinquent in paying their bill. A liability is a thing of value owned by a business.

A liability is a claim by a creditor against the assets of a business.

Which of the following statements is the correct definition of a liability? Multiple choice question. A liability is recorded when money is earned by the business. A liability is a claim against a customer who is delinquent in paying their bill. A liability is a claim by a creditor against the assets of a business. A liability is a thing of value owned by a business.

A liability is a claim by a creditor against the assets of a business.

Which of the following statements is (are) correct regarding the definition of a liability? Multiple select question. A liability is a thing of value owned by the business and is increased on the left side of a T-account. A liability is an asset waiting to be received by a business. A liability is a debt owed by the business. 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. 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.

Which of the following formulas is correct in depicting the expanded accounting equation? Multiple choice question. Assets = Liabilities + Common stock + Dividends - Revenues + Expenses Assets = Liabilities - Common stock - Dividends + Revenues + Expenses Assets = Liabilities + Common stock - Dividends + Revenues - Expenses Assets + Liabilities = Common stock - Dividends + Revenues - Expenses

Assets = Liabilities + Common stock - Dividends + Revenues - Expenses

Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash. Checks, coins, accounts payable Coins, accounts receivables, checks Coins, checks, money orders Checks, money orders, supplies

Coins, checks, money orders

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.) Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation. Equipment is an asset. Equipment purchases are expensed, in their entirety, in the period in which they occur. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense.

Equipment purchases are reported on the balance sheet. Equipment is reported on the left side of the accounting equation. Equipment is an asset. Equipment cost is initially recorded as an asset and the cost is allocated over time to expense.

Which statement best describes a T-account? Multiple choice question. A T-account is a formal financial statement which reports whether debits = credits at any given time. A T-account is used in a business to accurately report the financial status of its operations to the owners. A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions. A T-account is used to record transactions in a chronological order and serves as a book of original entry.

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

Identify which of the following lists include only examples of assets. Multiple choice question. Unearned revenue, Accounts payable, Cash Building, Cash, Accounts receivable Equipment, Dividends, Land Cash, Accounts payable, Supplies

Building, Cash, Accounts receivable

Which of the following statements is the correct definition of equity? Equity addresses the rights of creditors against the assets of a business. Equity is the owner's claim on a company's assets. Equity includes the things of value owned by a business. Equity is the cost of doing business during a period.

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

Which of the following statements is the correct definition of equity? Equity is the cost of doing business during a period. Equity addresses the rights of creditors against the assets of a business. Equity includes the things of value owned by a business. Equity is the owner's claim on a company's assets.

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

Which of the following statements is correct regarding expenses. Multiple choice question. Expenses increase equity. Expenses are reported on the left side of the accounting equation. Expenses are increased on the left side of their T-account because they decrease equity. Expenses result from products or services provided to customers

Expenses are increased on the left side of their T-account because they decrease equity.

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

Journal

Which of the following lists of items contain only examples of prepaid (expense) accounts? Prepaid rent, prepaid insurance Prepaid insurance, unearned revenue, prepaid accounts payable Prepaid insurance, prepaid accounts receivable, prepaid land Prepaid rent, prepaid land

Prepaid Rent and Prepaid Insurance

Select the statement below that best defines prepaid accounts. Prepaid accounts are expenses and are increased with a credit. Prepaid accounts reflect a company's cash balance and include currency, coins and money orders. Prepaid accounts are liabilities that are due within a specified time period. Prepaid accounts are assets that represent prepayments of future expenses.

Prepaid accounts are assets that represent prepayments of future expenses.

Which of the following lists of items contain only examples of prepaid (expense) accounts? Prepaid insurance, unearned revenue, prepaid accounts payable Prepaid insurance, prepaid accounts receivable, prepaid land Prepaid rent, prepaid insurance Prepaid rent, prepaid land

Prepaid rent, prepaid insurance

From the following lists of accounts, choose the list(s) which contains only expense accounts. Multiple choice question. Rent expense, supplies expense, accounts payable Rent expense, wages expense, insurance expense Wages expense, unearned revenue, supplies expense Rent expense, dividends, insurance expense

Rent expense, wages expense, insurance expense

Assets

Resources owned or controlled by the business

When the product or service related to an unearned revenue is delivered, the earned portion of the unearned revenue is transferred to a _____ account.

Revenue

Which of the following are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.) The expired portion of prepaid accounts is reported on the income statement as an expense. The expired portion of prepaid accounts is treated as liabilities. Over time, the expired portion of prepaid accounts is removed from the account and reported as an expense. The unexpired portion of prepaid accounts are treated as assets.

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

Which of the following describes a general ledger?

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

Liabilities

The obligations owed by the business to creditors

Which of the following statements are accurate regarding supplies? (Check all that apply.) Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. Unused supplies are treated as assets. Supplies are assets until they are used. Unused supplies are treated as expenses. When supplies are purchased, they are added to the Supplies account. Supplies is considered a liability account.

Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. Unused supplies are treated as assets. Supplies are assets until they are used. When supplies are purchased, they are added to the Supplies 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. Common and unique accounts used by a business. A complete record of each transaction in one account. Increases and decreases in all accounts in a business.

Which accounts are being used by a company and their balances at any given time. Common and unique accounts used by a business. Increases and decreases in all accounts in a business.

All of the following are examples of accrued liabilities: Multiple select question. accounts payable taxes payable interest payable notes payable wages payable

taxes payable interest payable wages payable

All of the following are examples of accrued liabilities: Multiple select question. taxes payable interest payable accounts payable notes payable wages payable

taxes payable interest payable wages payable