MGMT 200 - Chapter 2

A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account. a. debits; credits b. inputs; outputs c. assets; liabilities

a

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

a

Claire purchases equipment for $10,000 by paying $3,000 in cash and borrowing $7,000 from the bank. The number of accounts affected by this transaction is a. three. b. two. c. one. d. four.

a

Net income ______ retained earnings. a. increases b. decreases c. has no effect on

a

Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction? a. Debit cash $3,000; credit note payable $3,000. b. Debit cash $3,000; credit note receivable $3,000. c. Debit note payable $3,000; credit note receivable $3,000. d. Debit account receivable $3,000; credit note payable $3,000.

a

Revenues ______ retained earnings; therefore, to increase any revenue, one would ______ the revenue account. a. increase; credit b. decrease; credit c. decrease; debit d. increase; debit

a

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the right side of this equation are increased with a. credits. b. both debits and credits depending on the account. c. debits.

a

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the right side of this equation are increased with a. credits. b. debits. c. both debits and credits depending on the account.

a

The accounting equation is: a. Assets = Liabilities + Stockholders' Equity b. Assets - Liabilities = Stockholders' Equity - Liabilities c. Assets + Liabilities = Stockholders' Equity d. Assets = Liabilities - Stockholders' Equity

a

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

a

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

a

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

a

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

a

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

a, b, c

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

a, b, d

The types of accounts which affect retained earnings are a. expenses. b. revenues. c. assets. d. liabilities. e. dividends.

a, b, e

Which of the following are components of calculating net income? a. Expenses b. Dividends c. Revenues d. Common stock

a, c

Identify the three components of retained earnings. a. Expenses b. Assets c. Revenues d. Dividends

a, c, d

The types of accounts which affect retained earnings are a. expenses. b. liabilities. c. revenues. d. assets. e. dividends.

a, c, e

Geo Corporation issues stock to investors for $100,000. Recording this transaction will include which of the following? a. Credit common stock b. Debit to retained earnings c. Credit revenues d. Debit to cash

a, d

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply) a. A liability is decreased b. Revenue is increased c. Stockholders' equity is increased d. Another asset is increased

a, d

Roland Corporation borrows $10,000 from the bank by signing a promissory note. Recording this transaction will include: a. credit to notes payable b. credit to retained earnings c. debit to accounts receivable d. debit to cash

a, d

The types of accounts which affect retained earnings are a. expenses. b. assets. c. liabilities. d. revenues. e. dividends.

a, d, e

The acronym DEALOR can be used to remember how debits and credits affect different accounts. The three types of accounts that are increased with debits (represented by the DEA in the acronym) are (Select all the apply): a. expenses. b. earnings. c. accounts payable. d. dividends. e. debt. f. assets.

a, d, f

A chronological record of all economic events affecting a firm are recorded in a(n) a. trial balance b. journal c. ledger d. balance sheet

b

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

b

A t-account has space at the top for the account title and two sides for recording ______ and ______ to the account. a. assets; liabilities b. debits; credits c. inputs; outputs

b

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company. a. account; journal b. account; general ledger c. journal; general ledger d. general ledger; journal

b

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company. a. general ledger; journal b. account; general ledger c. journal; general ledger d. account; journal

b

Accounts receivable are a component of net income and a. retained earnings. b. assets. c. liabilities. d. stockholders' equity accounts.

b

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

b

Analyze the following journal entry. What is the transaction that required this journal entry? a. Sell equipment to customers b. Purchase equipment for cash c. Purchase equipment by signing a note payable

b

Because expenses reduce retained earnings, a ______ to expense is essentially a(n) ______ to retained earnings. a. credit; debit b. debit; debit c. decrease; decrease d. debit; credit

b

Klick's journal shows a debit to cash and a credit to common stock. This journal entry indicates that Klick: a. paid dividends to its stockholders b. issued shares to stockholders c. purchased shares from investors

b

Revenues ______ retained earnings; therefore, to increase any revenue, one would ______ the revenue account. a. decrease; credit b. increase; credit c. increase; debit d. decrease; debit

b

Shannon Corporation issues common stock for $25,000. Recording this transaction will include a a. credit to revenues. b. credit to common stock. c. credit to accounts receivable. d. debit to retained earnings.

b

Smith Company's journal shows a debit to cash and a credit to notes payable, both for $15,000. This indicates that Smith Company: a. paid a loan in the amount of $15,000 b. borrowed $15,000 cash and signed a note c. received cash of $15,000 from an investor

b

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the left side of this equation are increased with a. credits. b. debits. c. both debits and credits depending on the account.

b

The last step for analyzing the effect of transactions is: a. Determine a second account in the accounting equation that will increase or decrease b. Confirm that assets are equal to liabilities plus stockholders' equity c. Determine one account in the accounting equation that will increase or decrease

b

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

b

Ursula Company's bookkeeper records revenue relating to a customer transaction. This indicates that the company a. received a cash payment from a customer. b. provided goods or services to a customer. c. signed a contract with a customer.

b

What effect does revenue have on retained earnings? a. No effect b. Increases c. Decreases

b

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

b

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

b

Which type of account is increased with a credit? a. Asset b. Revenue c. Expense d. Dividend

b

Which of the following are components of calculating net income? a. Dividends b. Expenses c. Revenues d. Common stock

b, c

Which of the following are stockholder equity accounts? a. Notes payable b. Common stock c. Retained earnings d. Accounts receivable e. Inventory

b, c

Identify the three components of retained earnings. a. Assets b. Expenses c. Dividends d. Revenues

b, c, e

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

b, d

Which of the following are stockholder equity accounts? a. Accounts receivable b. Retained earnings c. Notes payable d. Common stock e. Inventory

b, d

A transaction will always affect at least ______ accounts. a. three b. four c. two

c

A(n) ______ is maintained for each financial statement item, whereas a(n) ______ contains all of the accounts of the company. a. account; journal b. general ledger; journal c. account; general ledger d. journal; general ledger

c

Accounts receivable are assets which represent a. total revenues for the period. b. the amounts owed to suppliers. c. the amounts owed by customers. d. net income for the period.

c

An account that is used informally for analysis instead of drawing a formal general ledger account is referred to as a: a. debit account b. journal account c. t-account d. credit account

c

An account that is used informally for analysis instead of drawing a formal general ledger account is referred to as a: a. journal account b. debit account c. t-account d. credit account

c

Analyze the following journal entry. Which of the following transactions required this journal entry? a. Issuing stock to investors b. Paying cash for supplies c. Borrowing cash from the bank d. Performing services for customers

c

Because expenses reduce retained earnings, a ______ to expense is essentially a(n) ______ to retained earnings. a. debit; credit b. decrease; decrease c. debit; debit d. credit; debit

c

Expenses ______ retained earnings; therefore, to increase any expense, one would ______ the expense account. a. increase; debit b. decrease; credit c. decrease; debit d. increase; credit

c

Net income ______ retained earnings. a. has no effect on b. decreases c. increases

c

Revenues cause retained earnings to a. Revenues do not change retained earnings. b. decrease. c. increase.

c

Revenues cause retained earnings to a. decrease. b. Revenues do not change retained earnings. c. increase.

c

Smith Company's journal shows a debit to cash and a credit to notes payable, both for $15,000. This indicates that Smith Company: a. received cash of $15,000 from an investor b. paid a loan in the amount of $15,000 c. borrowed $15,000 cash and signed a note

c

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the left side of this equation are increased with a. both debits and credits depending on the account. b. credits. c. debits.

c

The accounting equation is Assets = Liabilities + Stockholders' Equity. Accounts on the right side of this equation are increased with a. debits. b. both debits and credits depending on the account. c. credits.

c

The first step for analyzing the effect of transactions is: a. Determine a second account in the accounting equation that will increase or decrease b. Confirm that assets are equal to liabilities plus stockholders' equity c. Determine one account in the accounting equation that will increase or decrease

c

The purpose of a general ledger is to a. record a chronological listing of the accounts used by a particular company. b. record all transactions for a particular item. c. provide in a single location the list of transactions affecting each account and the account's balance.

c

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

c

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

c

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

c

The type of information included in an account includes a. a daily total. b. a posting reference. c. the account title. d. columns for debits and credits.

c, d

The type of information included in an account includes a. a posting reference. b. a daily total. c. columns for debits and credits. d. the account title.

c, d

The acronym DEALOR can be used to remember how debits and credits affect different accounts. The three types of accounts that are increased with credits (represented by the LOR in the acronym) are a. operating activities. b. receivables. c. liabilities. d. owners' equity. e. long-term assets. f. revenues.

c, d, f

Analyze the following journal entry. What is the transaction that required this entry? a. Record income for the period b. Borrow from the bank c. Perform services on account d. Issue stock to investors

d

Indigo Company's journal reveals that equipment was debited and notes payable was credited, both for $10,000. Indigo Company must have a. purchased equipment and paid off a note payable b. sold equipment and paid off a note payable c. sold equipment and signed a note for the sales price d. purchased equipment and signed a note for the purchase price

d

Rawlings Corp. borrows $3,000 on a note payable from Third National Bank. Which of the following is used to record this transaction? a. Debit account receivable $3,000; credit note payable $3,000. b. Debit cash $3,000; credit note payable $3,000. c. Debit note payable $3,000; credit note receivable $3,000. d. Debit cash $3,000; credit note receivable $3,000.

d

Shannon Corporation issues common stock for $25,000. Recording this transaction will include a a. credit to accounts receivable. b. credit to revenues. c. debit to retained earnings. d. credit to common stock.

d

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

d

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

d

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

True or false: A balance sheet is a list of all accounts and their balances showing that debits equals credits.

false

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

false

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

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

journal, ledger

The term debit means to place the entry on the ________ hand side of the account, and the term credit means to place the entry on the ________ hand side of the account.

left, right

The accounting equation is: Assets = ________ + Stockholders' Equity.

liabilities

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 a. transaction analysis. b. preparing journal entries. c. posting. d. preparing adjustments.

posting

Consistent with the ________ recognition principle, companies record revenue at the time goods are provided to customers. (Enter only one word.)

revenue

The two basic components for calculating net income are ________ and ________. (Enter one word per blank.)

revenues, expenses

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

True or false: The accounting equation must always remain in balance.

true