.
Assume that in the current year a company performed $100 of services for a client but only $30 was collected in cash at the time the services were performed. This transaction would be recorded in the horizontal model with:
+30 Cash and +70 Accounts Receivable in the Assets column and +100 Service Revenue in the Revenues column.
Assume that in the current year a company paid $50 in cash for advertising services that were availed in a prior period. This amount was recorded as an expense at the time of availing the services. This transaction would be recorded in the horizontal model with:
-50 Cash in the Assets column and -50 Accounts Payable in the Liabilities column.
Assets = Liabilities + Paid-in capital + Retained earnings (beginning/ending) + (Revenues/Expenses) - (Revenues/Expenses)
Beginning Revenue Expenses
When a bank (debits/credits) your account for the interest earned during the month, what it is really communicating is that it is (increasing/decreasing) the (asset/liability) recorded in its accounting records to represent your account from its perspective.
Blank 1: credits Blank 2: increasing Blank 3: liability
Merchants who send you a notice that they have "charged" your account are really communicating that they have (debited/credited) your account in their accounting records to (increase/decrease) your account balance, which is shown as a(n) (asset/liability) from their perspective, since you owe them money
Blank 1: debited Blank 2: increase Blank 3: asset or assets
When a bank (debits/credits) your account for the service charges incurred during the month, what it is really communicating is that it is (increasing/decreasing) the (asset/liability) recorded in its accounting records to represent your account from its perspective.
Blank 1: debits Blank 2: decreasing Blank 3: liability
Accounts are summarized in financial (statements/entities/transactions), whereas (statements/entities/transactions) are summarized in accounts.
Blank 1: statements Blank 2: transactions
The name(s) and amount(s) of any accounts to be (debited/credited) are listed first and shown to the left.
Debited
The abbreviation for debit is and the abbreviation for credit is .
Dr Cr
On which side of a balance sheet would these normal account balances be posted?
Expenses on the debit side and revenues on the credit side
Which of these statements accurately describe a chart of accounts?
It is usually sequenced with assets listed first, followed by liabilities, stockholders' equity, revenues, and expenses. It serves as an index to a company's ledger.
A chart of accounts serves as an index to a company's (journal/ledger/income statement/transactions).
Ledger
In bookkeeping and accounting, debit means , and credit means .
Left right
Which of these are source documents that often support journal entries?
Purchase order Invoice from a supplier Check stub
an expense amount means that net income is (reduced/increased) because of expenses being (lower/higher).
Reduced Higher
Assets = Liabilities + Paid-in capital + Blank______.
Retained earnings (beginning of period) + Revenues (during the period) - Expenses (during the period)
Which statements are true of stockholders' equity accounts?
They normally have a credit balance. They increase with credit entries. They decrease with debit entries.
True or false: The key to using the horizontal model is to keep the balance sheet in balance.
True
Normal account balances Blank______.
are on the debit side for assets and on the credit side for liability and stockholders' equity accounts
Transactions Blank______.
are summarized in accounts, and accounts are further summarized in financial statements provide the raw data that ends up being analyzed in financial statements
If debits equal credits, what will be shown on the balance sheet?
assets will equal the sum of liabilities and stockholders' equity.
In bookkeeping and accounting, debit means left and means .
credit Right
Merchants who send you a notice that they have "charged" your account are really communicating that they have:
debited your account to increase your account balance, which is shown as an asset (accounts receivable) in their accounting records.
Credit entries:
decrease asset accounts and increase liability and stockholders' equity accounts.
When a bank debits your account for the service charges incurred during the month, what the bank is really communicating is that the bank is:
decreasing your account balance, which is shown as a liability from the bank's perspective.
Although revenues and expenses are reported on the income statement, they also:
impact stockholders' equity on the balance sheet.
When using the horizontal model for a transaction that affects both the balance sheet and the income statement, the balance sheet will balance when the Blank______.
income statement effect on stockholders' equity is considered
Debit entries:
increase asset accounts and decrease liability and stockholders' equity accounts.
debit entries
increase expense accounts and decrease revenue accounts
When a bank credits your account for the interest earned during the month, what it is really communicating is that it is:
increasing your account balance, which is shown as a liability from its perspective.
Transactions are initially recorded in a (journal/ledger/chart of accounts).
journal
After transactions have been recorded in a journal, they are posted to a (roster/ledger/log).
ledger
The report format of the balance sheet Blank______.
presents assets above liabilities and stockholders' equity items
The account format of the balance sheet:
presents assets on the left and liabilities and stockholders' equity items on the right.
In a balance sheet, net income from the income statement is added to the beginning balance of __.
retained earnings in the statement of changes in retained earnings.
A chart of accounts:
serves as an index to a company's ledger.
An invoice from a supplier, a copy of a customer's credit card purchase receipt, and a check stub are examples of Blank______.
source documents
If debits equal credits, then:
the company's balance sheet equation will be in balance.
