question

A separate ___ is used to post transactions and provides a summary of the effects of all transactions for a particular item.

answer

Account

question

What are two roles of financial accounting?

answer

- measure business activities of a company - communicate information to external parties for decision making purposes

question

Transactions are classifies as

answer

internal or external transactions

question

The term "accounting cycle" refers to the full set of ___ utilized to measure and communicate business transactions to external decision makers.

answer

procedures

question

General Ledger

answer

includes all accounts used to record the company's transactions

question

A t-account has space at the top for the account title and two sides for recording ___ and ___ to the account.

answer

-debits; credits - increases; decreases

question

What is the correct order of the items found on the balance sheet?

answer

- assets - liability - stockholders' equity

question

The accounting equation is: ___ = liabilities + stockholders' equity.

answer

assets

question

A journal entry should contain what?

answer

- accounts and amounts debited - accounts and amounts credited - description of the transaction - the date

question

An event that effect the financial position of a company but does not include an exchange with a separate economic entity is a what?

answer

internal transaction

question

If a transaction decreases cash by $100, the balance sheet will balance if which of the following occurs?

answer

- another asset is increased - a liability is decreased

question

A chronological record of all economic events affecting a firm are recorded in a what?

answer

journal

question

What is a internal transaction?

answer

using supplies on hand

question

Internal transactions

answer

uses supplies on hand

question

External transactions

answer

purchases supplies from a vendor

question

T-account

answer

An account that is used for analysis instead of drawing a formal general ledger account

question

Paying salaries to employees, borrowing money from the bank and purchasing inventory from suppliers is all a part of what kind of transaction?

answer

external transaction

question

An ___ transaction involves an exchange between the company and a separate economic entity

answer

external

question

Dividends are increased with a ___.

answer

debit

question

A list of all the account numbers and account titles used by a company is referred to as a

answer

chart of accounts

question

Which accounts require a credit to increase the account?

answer

- revenue - common stock

question

In a double entry accounting system, the right side of the account is referred to as a

answer

credit

question

The progress of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as ___

answer

posting

question

Expense

answer

cost of conduction business during the period

question

Dividend

answer

distribution of cash to stockholders

question

A external transaction example is

answer

purchasing supplies from a vendor

question

For every journal entry, ___must be equal to credits

answer

debits

question

The type of information included in an account includes

answer

columns for increases and decreases, the account number, the account title

question

The primary purpose of a source document is to assist in

answer

analyzing a transaction

question

If a transaction decreases cash by $100, the balance sheet will balance

answer

- A liability is decreased - Another asset is increased

question

In a double-entry accounting system, a ___ represents the left side of the account.

answer

debit

question

Prepaid rent is

answer

rent that is paid in advance

question

A list of all accounts and their balances at a particular date showing that edits equal credits is referred to as a ___ ___.

answer

trial balance

question

Which accounts require a credit entry?

answer

- retained earnings - accounts payable

question

Revenue

answer

services performed for customers on account

question

Unearned revenue

answer

cash received from customers for services performed in the future

question

Examples of internal transactions

answer

- using supplies purchased an paid for last month - earning revenues after cash is received in advance from customers

question

The commonly used format for recording a transaction is referred to as a

answer

journal entry

question

An increase in revenues increases ___ ___, which increases retained earnings, which increases stockholders' equity.

answer

net income

question

Zelda purchases $10,000 of supplies on account. The balance sheet effect of this transaction are to

answer

- increase liabilities - increase assets

question

Stockholders' equity accounts normally have a ___ balance.

answer

credit

question

On August 2, Garner Company provides services to a long-time customer for $50,000. Payment for this service is due on September 1. What journal entry is made to record this transaction on August 2?

answer

Debits accounts receivable; credit service revenue

question

The sum of accounts with ___ balances must equal the sum of the accounts with ___ balances.

answer

- debit - credit

question

What accounts would normally have a debit balance on the trial balance?

answer

- inventory - cash - utility expense

question

Determine the three steps for analyzing the effect of transactions in the correct order.

answer

- 1) Determine one account in the accounting equation that will increase and decrease - 2) Determine a second account in the accounting equation that will increase and decrease - 3) Confirm that assets are equal to liabilities plus stockholders' equity

question

If you want to decrease an asset account, you would ___ the asset account.

answer

credit

question

Computerized system

answer

Journal entries are instantly posted to the general ledger

question

Manual system

answer

Journal entries are posted periodically to the general ledger

question

What are the balance sheet effects of providing services on account to customers?

answer

- increase assets - increase retained earnings

question

The purpose of a journal is to

answer

record a chronological listing of every transaction for a company

question

Revenue and exoence accounts are shown in the ___ ___.

answer

income statement

question

Which accounts require a debit entry to increase the account?

answer

- advertising expense - account receivable - supplies

question

The term debit means to place the entry on the ___ side of the account, and the term credit means to place the entry on the ___ side of the account.

answer

- left - right

question

Long issued 5,000 shares of stock for 10,000. long used $2,000 of the proceeds to purchase supplies, and borrow $8,000 cash from the bank. Long's total assets are

answer

$18,000. The issuance of stock will cause assets to increase by $10,000. The purchase of supplies for cash will have no affect on total assets (cash decreases and supplies increases.) Borrowing from bank will increase cash (an asset) by $8,000. Therefore, total assets equals $18,000.

question

A ___ represents a payment of cash to the stockholders of a company.

answer

dividend

question

If a transaction decrease cash by $100, the balance sheet will balance if what occurs?

answer

- another asset is increased - a liability is decreased

question

A ___ is maintained for each financial statement item, whereas a ___ contains all of the accounts of the company.

answer

- account; general ledger

question

What are components of calculating net income?

answer

- revenues - expenses

question

To increase a revenue account, you should ___ the revenue account.

answer

credit

Financial Accounting Chapter 2 Connect Homework – Flashcards

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