Chapter 2 ACCT. Smartbook
What is required info when entering a transaction into a journal?
-Credited accounts -Explanation of transaction -Debited accounts -Date of the transaction
Which of the following statements are accurate regarding supplies?
-Supplies are assets until they are used -When supplies are purchased, they are added to the Supplies account -Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies -Unused supplies are treated as assets
Illustrate how the financial statements are linked by placing them in the correct order of preparation
1. Income statement 2. Statement of retained earnings 3. Balance sheet
When preparing a trial balance, there are certain steps that need to be followed. Place the following steps in the correct order.
1. List each account title and its amount from the general ledger 2. Compute the total of debit balances and the total of credit balances 3. Verify that total debit balances equal total credit balances
Recall the required information in a financial statement heading.
1. Name of business 2. Name of financial statement 3. Period of time the financial statement covers
You are entering a transaction in the journal. Place the following steps in the order that they would be entered in the journal.
1. ~ :1 Enter date of transaction in date column 2 Enter name of account(s) debited and their amount(s) 3 Enter name of account(s) credited and their amount(s) 4.Enter explanation
Choose the statement below that correctly explains a general journal..
A journal is a complete record of each transaction in one place and includes the debit and credit of each transaction.
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 is a claim by creditors against the assets of a business a liability can be settled by transferring assets or providing products or services to others
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.
Which statement best describes a T-account?
AT-account represents a ledger account and is a tool used to understand the effects of one or more transactions.
Liabilities
Claims against the assets of a business
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
A business pays $500 for rent. How would this payment affect the equity of a business?
Expenses are increased, so equity is decreased
Which of the following statements is correct regarding the effect of debits and credits in accounts?
Expenses reduce equity, so to increase an expense account you would debit it.
Creditors
Individuals or organizations that have rights to receive payments from a business
From the lists of accounts below, which one contains only revenue accounts?
Interest revenue, Professional fees earned, Sales
A journal
It is a book of original entry that includes a chronological record of all transactions that have occurred within a business during a period occurred
General Ledger
It is a collection of all accounts with their activity and balances that exist in a business.
A chart of accounts
It is a list of all ledger accounts which exist in a business and includes and identification number assigned to each account.
A trial balance
It is a list of each account and its balance at any given time and is used to verify that debits = credits
Given the descriptions below, which is (are) true regarding notes receivable? (check all that apply)
Notes receivable is classified as an asset Another name for a note receivable is a promissory note Notes receivable is decreased with a credit It is the promise of another entity to pay a definite sum of money on a specified future date
Select the statement below that best defines prepaid accounts
Prepaid accounts are assets that represent prepayments of future expenses.
Which of the following statements about revenues is correct?
Revenues cause equity to increase, and they are increased on the right side of the T-account
Which of the following accounts would be considered an asset?
Supplies Accounts Receivable Cash Building
Expenses
The cost of doing business
Which of the following best and fully describes a general ledger?
The general ledger is a record containing all accounts used by a company.
Liabilities
The obligations owed by the business to creditors
Assets
Things of value owned by a business
Which of the following accounts has a normal credit balance?
Unearned consulting revenue Common stock Accounts payable
Accounts payable refer to obligations owed ___ (by/to) the business and are classified as a(n) ______ (asset/liability/expense) account.
by liability
The account title is shown at the top of a T-account. The left side is called the ______ side and the right side is called the _____ side.
debit credit
Brown company paid its employee his weekly wages of $400. Show how to record the transaction by completing the following sentence. The wages expense account would be ____ (debited/credited) on the ___ (left/right) side of the T-account, and the cash account would be ____ (credited/debited) on the ____ (left/right) side of the t-account.
debited left credited right
Since expenses are the costs of doing business and cause equity to _______, expenses are increased on the ______ side of their T-account
decrease; left
Which of the following would be included on a statement of retained earnings?
dividends retained earnings at beginning of period retained earnings at end of period net income (loss)
Which of the following accounts impact equity?
expenses common stock dividends revenue
Which of the following would be included on an income statement? (Check all that apply.)
net income total revenues total expenses
Revenues
the dollars earned because of services performed or products sold
equity
the residual interest in the assets of a business after deducting the business's debts
Assets
things of value owned by a business
