unit 2 smartbook

creditor

A creditor is an individual or organization that has a right to receive payments from a business.

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.

notes receivable

Another name for a note receivable is a promissory note. Notes receivable is classified as an asset. It is the promise of another entity to pay a specific sum of money on a specified future date.

what accounts would be considered an asset

Building Supplies Cash Accounts receivable

what would be considered a source document in an accounting system?

Checks Sales receipt Payroll records Purchase order

Notes Payable

Notes payable is reported on the balance sheet. Notes payable is a formal promise to pay a certain sum of money on a specified future date. Notes payable is a liability account.

What are examples of prepaid (expense) accounts? (Check all that apply.)

Prepaid insurance Prepaid rent (not prepaid buildings, thats a diff. asset acc)

land account

The Land account is an asset. The Land account is increased on the left side of its T-account. The Land account is used to record the costs of land purchased by the business.

general ledger

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

unearned revenues

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.

supplies

When supplies are purchased, they are added to the Supplies 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.

Prepaid Accounts

assets that represent prepayments of future expenses

When financial statements are prepared, unexpired prepaid accounts are recorded as _______________ and the expired portion of the prepaid account is reported as _____________________

assets, expense

would be considered "cash" and reflected in a company's Cash account?

check, money orders, coin

The general ledger can be used to determine

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

Accrued Liabilities

expenses that have been incurred but have not been paid at the end of the accounting period ex. wages payable interest payable taxes payable

when credit sales are made, accounts receivable...

increase

Equity

owner's claim on a company's assets.

An account

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

accounts payable

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

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

A liability can be settled by

transferring assets or providing products or services to others.

Building account

used to record the costs of purchasing a store, office, warehouse or factory.