Chapter 2 Review

A debit is used to increase which of the following accounts? A. Utilities Expense B. Accounts Payable C. Service Revenue D. Common Stock

A. Utilities Expense

Providing services to customers on account for $100 is recorded as ...

Accounts Receivable $100 Service Revenue $100

Which of the following causes the accounting equation not to balance? A. Increase assets; increase liabilities. B. Decrease assets; increase expenses. C. Increase assets; increase dividends. D. Decrease liabilities; increase revenues.

C. Increase assets; increase dividends.

Which of the following transactions causes an increase in total assets? A. Pay employee salaries for the current month. B. Pay dividends to stockholders. C. Issue common stock in exchange for cash. D. Purchase office equipment for cash.

C. Issue common stock in exchange for cash.

Which of the following transactions causes and increase in stockholders' equity? A. Pay dividends to stockholders. B. Obtain cash by borrowing from a local bank. C. Provide services to customers on account. D. Purchase advertising on a local radio station.

C. Provide services to customers on account.

Posting is the process of ... A. Analyzing the impact of the transaction on the accounting equation. B. Obtaining information about external transactions from source documents. C. Transferring the debit and credit information from the journal to individual accounts in the general ledger. D. Listing all accounts and their balances at a particular date and showing the equality of total debits and total credits.

C. Transferring the debit and credit information from the journal to individual accounts in the general ledger.

A trial balance can best be explained as a list of: A. The income statement accounts used to calculate net income. B. Revenue, expense, and dividend accounts used to show the balances of the components of retained earnings. C. The balance sheet accounts used to show the equality of the accounting equation. D. All accounts and their balances at a particular time.

D. All accounts and their balances at a particular time.

A credit is used to increase which of the following accounts? A. Dividends B. Insurance Expense C. Cash D. Service Revenue

D. Service Revenue

The components of Retained Earnings are ...

Revenues, Expenses, and Dividends