PCP - Chapter 2: Accounting for Business 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.
In defining a reporting period, which of the following statements is (are) correct?
A reporting period is determined by the business. A reporting period can be one month, one quarter or one year. A one-year reporting period is known as the fiscal year.
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.
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 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.
Choose the account(s) below, that would have a normal credit balance.
Accounts payable; revenues; common stock, unearned revenues.
Which set of accounts below would have a normal debit balance?
Expenses; Dividends; Cash
True or false: Assets are claims (by creditors) against the company.
False
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 flows.
Which of the following items would be considered "cash" and reflected in a company's Cash account?
Checks; coins; money orders
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 book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred
A journal
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 one or more transactions.
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 collection of all accounts with their activity and balances that exist in a business.
A general ledger
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.
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.
Which of the following accounts would be considered an asset?
Building Accounts receivable Cash Supplies
Identify which of the following lists include only examples of assets.
Building, Cash, Accounts receivable
Which of the following statements is the best definition of the 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.
When preparing a trial balance, there are certain steps that need to be followed. Place the following steps in the correct order. Instructions Verify that total debit balances equal total credit balances. List each account title and its amount from the general ledger. Compute the total of debit balances and the total of credit balances.
List each account title and its amount from the general ledger. Compute the total of debit balances and the total of credit balances. Verify that total debit balances equal total credit balances.
Which of the following statements correctly explains how to prepare a trial balance?
List each account title and its amount from the ledger. Verify that the total debit balances equals the total credit balances. Compute the total of debit balances and the total of credit balances.
Which of the following is correct regarding posting a transaction?
Posting means to transfer journal information to a ledger.
Which of the following would be considered a source document in an accounting system?
Purchase order Payroll records Checks Sales receipt
Which of the following describes a general ledger?
The general ledger is a record containing all accounts used by a company.
The general ledger can be used to determine which of the following
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
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
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.
list; credit
Transferring entries from the journal to the ledger is called (posting/preparing/journalizing)
posting