Accounting Chapter 2

Another asset is increased

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply)

Another asset is increased A liability is decreased

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs? (Select all that apply)

debit

In a double-entry accounting system, a(n) ______ represents the left side of the account.

True

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

journal

A _______ provides a chronological record of all transactions affecting the firm. True false question.

journal

A chronological record of all economic events affecting a firm are recorded in a(n)

account

A company records the effects of transactions for a particular item in a(n)

trial balance

A list of all accounts and their balances at a particular date showing that debits equal credits is referred to as a(n) _________

date

A proper journal entry includes the ______, the account and amount debited, the account and amount credited, and a brief explanation of the transaction.

External

A(n) ________ , transaction involves an exchange between the company and a separate economic entity

determine the accounts to debit and credit.

After the accountant analyzes the impact of a transaction on the accounting equation, the next step in the measurement process is to

1. Use source documents to identify accounts affected by external transactions 2. Analyze the impact of the transaction on the accounting equation 3. Assess whether the impact of the transaction results in a debit or credit to the account balance 4. Record transactions using debits and credits 5. Post the transaction to the T-accounts in the general ledger 6. Prepare a trial balance

Arrange the steps for measuring transactions in the correct order.

accounting cycle.

The full set of accounting procedures used to measure and communicate business transactions is referred to as the

Confirm that assets are equal to liabilities plus stockholders' equity

The last step for analyzing the effect of transactions is:

posting

The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as

provide in a single location the list of transactions affecting each account and the account's balance

The purpose of a general ledger is to

summarize all transactions for that item

The purpose of an account is to

communicate information to external parties for decision making purposes. measure business activities of the company.

The two roles of financial accounting are to:

False The two functions of financial accounting are to measure business activities and communicate those measurements to external parties for decision-making purposes.

True or false: The two functions of financial accounting are to measure business activities and prepare tax returns

Purchasing inventory from suppliers Paying salaries to employees Borrowing money from the bank

Which of the following are external transactions?

Ledger

Which of the following includes the list of transactions affecting each individual account and the account's balance?

Purchasing supplies from a vendor

Which of the following is an external transaction?

An account

Which of the following is used to record the summary of effects on one particular item?