Accounting chapter 2

Place the three steps for analyzing the effect of transactions in the correct order.

1. Determine one account in the accounting equation that will increase or decrease 2. Determine a second account in the accounting equation that will increase or decrease 3. Confirm that assets are equal to liabilities plus stockholders' equity

Arrange the steps for measuring transactions in the correct order.

1. Use a source document to identify accounts affected 2. Analyze the impact of the transaction on the accounting equation 3. Assess whether the transaction results in a debit or credit to account balances 4. Record the transaction in a journal 5. Post the transaction to the general ledger

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs?

A liability ls decreased Another asset is increased

When a company performs services for a customer, and the customer agrees to pay for the services at a later date, the transaction is recorded in which account?

Accounts Recievable

What is the correct order of the items found on the balance sheet?

Assets Liabilities Stockholders' Equity

Match the type of the accounting system with the method for posting journal entries.

Computerized system - Journal entries are instantly posted to the general ledger Manual system - Journal entries are posted periodically to the general ledger

A journal entry should contain which of the following information?

Description of the transaction The date Accounts and amounts credited Accounts and amounts debited

Which of the following are internal transactions?

Earning revenues after cash is received in advance from customers Using supplies purchased and paid for last month

Match each item with its def‌inition.

Expense - Cost of conducting business during the period Dividend - Distribution of cash to stockholders

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

Posting

Which of the following are external transactions?

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

Match the account used for each type of transaction.

Revenue - Services performed for customers on account Deferred revenue - Cash received from customers for services to be performed in the future

What are the three components of retained earnings?

Revenues, expenses, and dividends

A separate _______ is used to post transactions and provides a summary of the effects of all transactions for a particular item.

account

The two components of stockholders' equity are

common stock and retained earnings.

The two roles of f‌inancial accounting are to:

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

In a double entry accounting system, the right side of the account is represented by a(n)

credit

To increase an expense account, you should ___________ the expense account.

debit

Accounts on the left side of the accounting equation (assets) are Increased with a(n) ___________ to the account, whereas accounts on the right side of the accounting equation are increased with a(n) ___________.

debit; credit

A proper journal entry will have which account titles and amounts listed f‌irst?

debits

For every journal entry, total ________ must be equal to total ______

debits; credits

A(n) _______________ transaction involves an exchange between the company and a separate economic entity. (Enter one word per blank)

external

A ____________ ____________ is a collection of accounts used to keep track of increases and decreases in financial position elements.

general ledger

A(n) __________ transaction is an event that affects the f‌inancial position of the company but does not include an exchange with a separate economic entity.

internal

Transactions are classif‌ied as

internal or external transactions.

A debit represents the side of the account.

left

A chart of accounts is a

list of all account names and numbers used by a company.

The type of information included in an account includes

the account title columns for increases and decreases.