Ch. 02: Accounting for Business Transactions

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What is the general time period we use when determining if some accounting element is current vs. non-current?

1 year

What type of account is the following: Accounts Receivable

Asset

What type of account is the following: Buildings

Asset

What type of account is the following: Cash

Asset

What type of account is the following: Equipment

Asset

What type of account is the following: Land

Asset

What type of account is the following: Note Receivable

Asset

What type of account is the following: Prepaid Insurance

Asset

What type of account is the following: Prepaid Rent

Asset

What type of account is the following: Rent Receivable

Asset

What type of account is the following: Supplies

Asset

What goes first in the trial balance?

Assets

What account types / other information are listed only in the Balance Sheet?

Assets, Liabilities, Contributed Capital Accounts, & Ending Retained Earnings

What is the only financial statement to report at a point in time?

Balance Sheet

Which financial statement is prepared 3rd?

Balance Sheet

Retained earnings are listed on the trial balance. Are those beginning or ending retained earnings, though?

Beginning

Enter either DR or CR to answer the question. ↑ Common Stock

CR

Enter either DR or CR to answer the question. ↑ in Accounts Payable

CR

Enter either DR or CR to answer the question. ↑ in Rent Revenue

CR

Enter either DR or CR to answer the question. ↓ Cash

CR

Enter either DR or CR to answer the question. ↓ in Accounts Receivable

CR

Enter either DR or CR to answer the question. ↓ in Office Supplies

CR

What is the Normal Balance of the following account: Accounts Payable

CR

What is the Normal Balance of the following account: Common Stock

CR

What is the Normal Balance of the following account: Fees Earned

CR

What is the Normal Balance of the following account: Wages Payable

CR

On May 1, Mattingly Lawn Service collected $2,500 cash from a customer in advance of 5 months of lawn service. The JE to record this transaction includes a

CR: Unearned Lawn Services Fees for $2,500

What information does the Statement of Cash Flows provide?

Changes in cash broken down by activity type

What account types / other information are listed only in the Statement of Cash Flows?

Changes in cash by activity type

What is included in line 1 of the header for all 4 financial statements?

Company Name

The following account impacts which type of equity: Common Stock

Contributed Capital

Enter either DR or CR to answer the question. ↑ Cash

DR

Enter either DR or CR to answer the question. ↑ Dividends

DR

Enter either DR or CR to answer the question. ↑ in Accounts Receivable

DR

Enter either DR or CR to answer the question. ↑ in Office Supplies

DR

Enter either DR or CR to answer the question. ↑ in Rent Expense

DR

Enter either DR or CR to answer the question. ↓ in Accounts Payable

DR

What is the Normal Balance of the following account: Accounts Receivable

DR

What is the Normal Balance of the following account: Building

DR

What is the Normal Balance of the following account: Dividends

DR

What is the Normal Balance of the following account: Office Supplies

DR

What is the Normal Balance of the following account: Prepaid Rent

DR

What is the Normal Balance of the following account: Wages Expense

DR

Liang Shue contributed $250,000 cash and land worth $500,000 to open his new business, Shue Consulting Corporation. Which of the following journal entries does Shue Consulting make to record this transaction?

DR: Cash for $250,000 DR: Land for $500,000 CR: Common Stock for $750,000

Amalia Company received its utility bill for the current period of $700 and immediately paid it. Its journal entry to record this transaction includes a

DR: Utility Expense for $700

What is included in line 3 of the header for all 4 financial statements?

Date(s) covered by the Financial Statement

If you make a cash payment on an outstanding Accounts Payable, what impact does that have on the Accounts Payable account balance?

Decrease

If you make a cash payment on an outstanding Accounts Payable, what impact does that have on the Cash account?

Decrease

What does an increase in the following account type do to Equity? Dividends

Decrease

What does an increase in the following account type do to Equity? Expenses

Decrease

What account types / other information are listed only in the Statement of Retained Earnings?

Dividends & Beginning Retained Earnings

What critical piece of information does the Statement of Retained Earnings provide that we roll over to the Balance Sheet?

Ending Retained Earnings

What type of account is the following: Common Stock

Equity

What type of account is the following: Dividends

Equity

What type of account is the following: Retained Earnings

Equity

What type of account is the following: Advertising Expense

Expense

Enter either TRUE or FALSE regarding the statement below. A T-Account's DRs and CRs must balance (be equal).

FALSE

Which of the 3 activity types (OIF) covered by the Statement of Cash Flows begins with "F"?

Financing

Which financial statement is prepared 1st?

Income Statement

If you make a sell to a customer on credit, what impact does that have on the Accounts Receivable account?

Increase

If you make a sell to a customer on credit, what impact does that have on the Sales Revenue account?

Increase

What does an increase in the following account type do to Equity? Common Stock

Increase

What does an increase in the following account type do to Equity? Revenues

Increase

Which of the 3 activity types (OIF) covered by the Statement of Cash Flows begins with "I"?

Investing

What type of account is the following: Accounts Payable

Liability

What type of account is the following: Notes Payable

Liability

What type of account is the following: Taxes Payable

Liability

What type of account is the following: Unearned Revenue

Liability

What type of account is the following: Wages Payable

Liability

What is included in line 2 of the header for all 4 financial statements?

Name of the Financial Statement

What critical piece of information does the Income Statement provide us that we roll over to the Statement of Retained Earnings?

Net Income

If you make a sell to a customer on credit, what impact does that have on the Accounts Payable account?

No Effect

If you make a sell to a customer on credit, what impact does that have on the Cash account?

No Effect

Which of the 3 activity types (OIF) covered by the Statement of Cash Flows begins with "O"?

Operating

The following account impacts which type of equity: Dividends

Retained Earnings

The following account impacts which type of equity: Expenses

Retained Earnings

The following account impacts which type of equity: Revenues

Retained Earnings

What type of account is the following: Fees Earned

Revenue

What type of account is the following: Rent Revenue

Revenue

What account types / other information are listed only in the Income Statement?

Revenues & Expenses

What two account types are listed last on the trial balance?

Revenues & Expenses

Which financial statement is prepared 4th?

Statement of Cash Flows

Which financial statement is prepared 2nd?

Statement of Retained Earnings

Enter either TRUE or FALSE regarding the statement below. A Journal Entry's DRs and CRs must balance (be equal).

TRUE

Enter either TRUE or FALSE regarding the statement below. The total DRs and CRs of the accounts listed on the trial balance should balance (be equal).

TRUE

What critical piece of information does the Balance Sheet provide?

Verification that Assets = Liabilities + Equity

Account

a record of changes in a specific asset, liability, equity, revenue, or expense

Equity

a residual interest in a business' assets, with creditors being covered first

Current Asset

asset that will be collected or converted to cash within 1 year

Liabilities represent whose claims to an entity's assets?

creditors

Contributed Capital

investors' direct contributions to an entity

We record detailed information about transactions in the ____________

journal

We list summarized account balances in the __________.

ledger

Chart of Accounts

list of all ledger accounts with identification number assigned to each account

Liabilities

obligations to transfer assets or provide products or services in the future (future detriment).

Equity represents whose claims to an entity's assets?

owners

All but one of the financial statements cover a _____________ in time.

period

General Ledger

record of all accounts used by a company

Source Documents

records or documents that provide evidence of a transaction or event

Assets

resources owned and/or controlled by a company that are expected to yield future benefit


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