02

Question 1

What is an account?

Answer 1

An account is a record of increases and decreases for each:

• asset
• liability
• equity
• revenue
• expense

Question 2

What is a chart of accounts?

Answer 2

Chart of accounts is a listing of account titles and identification codes used in the general ledger.

Question 3

What are the 5 elements of the general ledger?

Answer 3

• Assets
• Liabilities
• Equity
• Revenues
• Expenses

Question 4

What is journalizing?

Answer 4

Journalizing is the process of recording a transaction in the journal.

Question 5

What is posting?

Answer 5

Posting is the process of transferring debits and credits from journal entries to related general ledger accounts (T accounts).

Question 6

What is the debit-credit system?

Answer 6

Debit-Credit system describes increases and decreases as debits and credits, ensuring debits equal credits.

Question 7

What are T-Accounts?

Answer 7

T-Accounts are a graphical representation of accounts where debits are recorded on the left and credits on the right.

Question 8

What is the accounting equation?

Answer 8

Accounting equation requires that increases and decreases are balanced, ensuring that debits equal credits.

Question 9

What is the extended accounting equation?

Answer 9

The extended accounting equation expands equity to reflect:

• common stock
• revenues
• dividends
• expenses.

Question 10

What is the purpose of the accounting cycle?

Answer 10

Accounting cycle is a sequence of activities performed to accumulate and report financial statements.

Question 11

What are the steps in the accounting cycle?

(5)

Answer 11

Steps in the accounting cycle include:

• Journalizing
• Posting
• Preparing trial balance
• Adjusting entries
• Preparing financial statements.