Best Chap 2 ACC

Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders

Creditors Liabilities Assets Expenses

Individuals or organizations that have rights to receive payments from a business Claims against the assets of a business Things of value owned by a business The costs of doing business

Which of the following statements is correct about prepaid accounts

Prepaid accounts are also called prepaid expenses and are considered assets.

Identify which of the following formulas correctly defines how to calculate the debt ratio.

Total liabilities/Total assets

Which of the following would be included on an income statement?

Total revenues Net income Total expenses

True or false: At the end of the period, the assets will still equal the liabilities plus equity.

True

On Mar 3, Lyons Company received $100 cash in advance of providing catering services to a customer. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry

Unearned Revenue would be credited and listed second Cash would be debited and listed first

Which of the following statements are accurate regarding supplies? (Check all that apply.)

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

Notes receivable is considered a(n)

asset

Analyzing the accounting equation at the end of the month will reveal the following. Select all that apply.

assets = liabilities + equity revenues and expenses will change the equity account

the general ledger can be used to determine which of the following (select all answers which apply):

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

The general ledger can be used to determine which of the following (select all answers which apply):

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.

Assets are claims (by creditors) against the company.

false

True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense

false

Accounts receivable are ____ by credit sales and are _____ by customer payments.

increased / decreased

A trial balance is a ___ 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

Which of the following statements is (are) correct regarding a T-account? (Check all that apply.)

A T-account represents a ledger account. A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction.

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

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

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.

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.

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 items

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.

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 accounts has a normal debit balance? (Check all that apply.)

Accounts receivable Cash Buildings Supplies

An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time? (Check all that apply.)

As a portion of the policy expires, the expired portion will be removed and transferred to an expense account. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset. The initial payment will be recorded as an increase to a Prepaid Insurance account.

Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.

On Nov. 1, Lyons Company pays $1000 cash for a 12-month insurance policy. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry (Check all that apply).

Cash would be credited and listed second Prepaid Insurance would be debited and listed first

Which of the following accounts has a normal credit balance? (Check all that apply.)

Common stock Unearned consulting revenue Accounts payable

Which of the following statements correctly explains how to prepare a trial balance? (Check all that apply.)

Compute the total of debit balances and the total of credit balances. List each account title and its amount from the ledger. Verify that the total debit balances equals the total credit balances. If an account has a zero balance, it may be omitted entirely.

J. Jackson invested $1,000 in his business in exchange for common stock. Show how to use T-accounts to record this transaction by selecting the correct answer below.

Debit Cash; credit Common stock

On Mar 3, Lyons Company paid dividends of $1,000. Use your knowledge of what a correct journal entry should look like to identify what would be included. (Check all that apply.)

Dividends would be debited and listed first. Cash would be credited and listed second.

Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment purchases are reported on the balance sheet. Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment is reported on the left side of the accounting equation. Equipment is an asset.

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.

Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.)

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

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger.

Select the statement below that best defines prepaid accounts.

Prepaid accounts are assets that represent prepayments of future expenses.

Which of the following statements is accurate about the Land account? (Check all that apply.)

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

Prepaid accounts are ___ hat represent prepayments of future expenses and are increased with a ___

asset / debit

transferring entries from the journal to the ledger is called

posting

Which of the following describes a general ledger?

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

An income statement reports:

the revenues less the expenses incurred by a business