Smartbook chap 2 accounting

Choose the statement below that correctly explains a general journal.

A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.

Which of the following statements is the correct definition of a liability?

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

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 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 statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services.

Which of the following statements is the correct definition of equity?

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

Which set of accounts below would have a normal debit balance?

Expenses; Dividends; Cash

Which statement is correct regarding entering transactions into the accounting equation?

If the total of the right side of the accounting equation increased, then the total of the left side of the accounting equation must also increase.

From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Common Stock and Revenues

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.

Select the statements that are true regarding debiting and crediting.

-A credit will always decrease an asset account. -A debit or a credit can increase or decrease an account, depending on the account. -A debit can increase an expense account. -For an account where a debit is an increase, the credit is a decrease.

Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)

-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 claim by creditors against the assets of a business.

Which of the following accounts is an asset?

-Accounts receivable -Supplies -Building -Cash

Which of the following accounts has a normal debit balance?

-Buildings -Supplies -Cash -Accounts receivable

Which of the following accounts has a normal credit balance?

-Common stock -Unearned consulting revenue -Accounts payable

Which of the following statements is (are) correct?

-Crediting a liability account will increase it. -Crediting the Common Stock account means to increase it. -Crediting means to enter transactions on the right side of a T-account.

Which of the following statements about the Dividends account is (are) correct?

-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.)

-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.

Which of the following statements are correct regarding a journal?

-In a journal, both the debit and credit side of the transaction can be seen. -Transactions are generally entered in chronological order. -A journal is used to record business transactions.

Which of the following statements are correct regarding the sides of a T-account?

-Liability accounts are increased on the right side. -Asset accounts are increased on the left side. -The left side is called the debit side. -The right side is called the credit side.

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 are accurate statements regarding how to report or treat prepaid accounts?

-Over time, the expired portion of prepaid accounts is transferred from the asset 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.

Which of the following are examples of prepaid (expense) accounts?

-Prepaid rent -Prepaid insurance

Which of the following accounts directly impact equity?

-Revenue -Common Stock -Expenses -Dividends

Which of the following accounts are examples of revenues?

-Sales -Service revenue -Fees earned

Which of the following accounts are examples of expenses?

-Supplies expense -Rent expense

On Sept 9, Daniels Corporation earns $2,000 by performing consulting services. Their customer said that she would pay next month. Daniels Corporation journalized the transaction as follows, but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like by identifying everything that is wrong. (Check all that apply.)

-The correct account that should be debited is the Accounts receivable account. -Accounts payable is not involved in this transaction. -Consulting revenue should be listed below the debited account as it is credited. -The Consulting revenue account should be indented, as it is credited.

On Jan. 2, Callie Taylor invests $40,000 into the business in exchange for common stock. She journalized the transaction as follows but something is wrong with the journal entry. Use your knowledge of what a correct journal entry should look like by identifying everything that is wrong. Select all answers which apply.

-The dollar amount is wrong in the Credit column. -The Cash account should be listed first. -The Common Stock account should be indented because it is credited. -Common Stock should be listed second, below Cash.

Select the statements below that are correct in regards to entering transactions in a journal.

-Total dollar amount of debits must equal the total dollar amount of credits. -Credited accounts should be indented.

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 revenue is a liability account which is set up when a customer pays in advance for a product or service.

Which of the following statements are accurate regarding supplies?

-Unused supplies are treated as assets. -Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies. -Supplies are assets until they are used. -When supplies are purchased, they are added to the Supplies account.

Enter one word for each blank. The expanded accounting equation is: ____ = ____ + common stock + ____ - ____ - dividends. Do not include the word "account(s)" in your answers. Note: order of the equation is important.

-asset -liability -revenue -expense

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

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

-assets -expenses

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

-by -liability

Choose the account(s) below, that would have a normal credit balance.

-common stock -accounts payable -revenues -unearned revenues

The T-account for Accounts payable had 4 transactions entered into it. It was increased by $300 and $100 and decreased by $50 and $150, respectively. The balance in the Accounts payable account at the end of the period would be a ____ _ (debit/credit) balance of $____.

-credit -200

To enter transactions on the right side of a T-account means you will ____ (debit/credit) the account and will cause a(n) ____ (decrease/increase) in a liability account.

-credit -increase

The T- account for Cash had 3 transactions entered into it. It was increased by $400 and decreased by $100 and $30, respectively. The balance in the Cash account at the end of the period would be a ____ (debit/credit) balance of $____.

-debit -270

On Jan. 2, Callie Company received a $700 payment from a customer previously billed for services performed. The journal entry to record this transaction would include a ____ (debit, credit) to the ____ account and a ____ (debit, credit) to the Accounts Receivable account.

-debit -cash -credit

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

To enter transactions on the left side of a T-account means you will ____ (debit/credit) the account and will cause a(n) ____ (decrease/increase) in an asset account.

-debit -increase

When entering a transaction into a general journal, the entry would be dated; then the accounts ____ (debited/credited) would be listed first; then the accounts ____ (debited/credited) would be listed next.

-debited -credited

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

-dividends -negative

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

-dividends -negative

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

-increase -equity

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

The rules of double-entry accounting say that for each transaction at least ____ accounts are involved, with at least one debit and one ____ .

-two -credit

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. -increases and decreases in all accounts in a business. -common and unique accounts used by a business.

You are entering a transaction in the journal. Place the following steps in the order that they would be entered in the journal.

1,date 2. debited 3.credited 4.explanation

List the steps to search for an error when the trial balance does not balance.

1. trial balance 2. verify the account balance 3. determine a debit or credit 4.recompute 5.verify

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

=increase -equity

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.

Which of the following statements is correct in regards to debiting and crediting an account?

A debit or a credit can increase an account, depending on what kind of account it is.

Which of the following formulas is correct in depicting the expanded accounting equation?

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

When the stockholders receive a dividend, how would this affect the equity of a business that paid the dividend?

Assets are decreased and equity is decreased.

The stockholders of a business received a $1000 dividend. How would this affect the total equity of the business?

Assets would be decreased and total equity would decrease as well.

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

Building, Cash, Accounts receivable

Match the definition on the left with the term/item on the right.

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

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, wages expense, insurance expense

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Which of the following lists of items contain only examples of prepaid (expense) accounts?

Prepaid rent, prepaid insurance

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 is correct?

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

Match the items on the left with their definition on the right.

assets- resources owned or controlled by the business Equity- the residual interest in the assets of a business after deducting the business's debts revenues-sales of products and services to customers liabilities- the obligations owed by the business to creditors

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

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

posting

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

posting

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

posting

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

An efficient way to search for an error causing the trial balance to not be in balance is to check the journalizing, posting, and trial balance preparation in ____ order.

reverse