ACG ch 3 – Flashcards
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For the basic accounting equation to stay in balance, each transaction recorded must
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Affect two or more accounts
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Credits decrease assets and increase?
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liabilities
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Assets normally show?
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Debit balances
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Transactions in a journal are initially recorded in?
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Chronological order
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On January 14, Decker industries purchased supplies of $500 on account. The entry to record the purchase will include
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A debit to supplies and a credit to accounts payable
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True or false? Expenses decrease retained earnings.
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True
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During 2014, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders' equity
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Increased 40,000
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Payment of a dividend
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decreases cash and decreases retained earnings
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An account is a part of the financial information system and is described by all except which one of the following?
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An account is a source document
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Which accounts normally have debit balances?
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assets, dividends, and expenses
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Which of the following is the correct sequence of events?
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Analyze a transaction, record it in the journal and post it to the ledger.
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Where is the first place every transaction is recorded?
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In the journal
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What type of account is unearned revenue?
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Liability
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Accounts are listed on the trial balance in?
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The order that they appear in the ledger
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The effects on the basic accounting equation of performing services for cash are to:
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increase assets and increase stockholders' equity.
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Genesis Company buys a $900 machine on credit. This transaction will affect the:
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balance sheet only.
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Which statement about an account is true?
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An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders' equity items.
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Debits:
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increase assets and decrease liabilities.
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A revenue account:
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is increased by credits.
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Paying an account payable with cash affects the components of the accounting equation in the following way:
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Decreases assets and decreases liabilities.
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Which is not part of the recording process?
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Preparing a trial balance.
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Which of these statements about a journal is false?
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It contains only revenue and expense accounts.
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A ledger:
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is a collection of the entire group of accounts maintained by a company.
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Posting:
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transfers journal entries to ledger accounts.
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A trial balance:
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is a list of accounts with their balances at a given time.
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A trial balance will not balance if:
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a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.
