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Accounting 2010 > Accounting Chapter 3 > Flashcards

Accounting Chapter 3 Flashcards

1
Q

Account

A

An Individual accounting record of increases and decreases in specific asset, livability, stockholders’ equity, revenue or expense items.

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2
Q

Accounting Information System

A

The system of collecting and processing transaction data and communicating financial information to decision-makers.

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3
Q

Accounting Transactions

A

Events that require the financial statements because they affect assets, liabilities, or stockholders’ equity.

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4
Q

Chart of Accounts

A

A list of a company’s accounts

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5
Q

Credit

A

The right side of an account

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6
Q

Debit

A

The left side of an account

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7
Q

Double-entry system

A

A system that records the two-sided effect of each transaction in appropriate accounts.

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8
Q

General Journal

A

The most basic form of journal

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9
Q

General ledger

A

A ledger that contains all asset, liability, stockholders’ equity, revenue, and expense accounts.

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10
Q

Journalizing

A

The procedure of entering transaction data in the journal.

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11
Q

Journals

A

An accounting record in which transactions are initially recorded in chronological order.

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12
Q

Ledger

A

The group of accounts maintained by a company.

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13
Q

Posting

A

The procedure of transferring journal entry amounts to the ledger accounts.

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14
Q

T-Account

A

The basic form of an account

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15
Q

Trial Balance

A

A list of accounts and their balances at a given time.

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16
Q

An individual accounting record of increases and decreases in specific asset, liability, stockholders’ equity, revenue or expense items.

a. Account
b. Accounting Information System
c. Accounting Transactions
d. Ledger

A

a. Account.

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17
Q

The system of collecting and processing transaction data and communicating financial information to decision-makers.

a. Account
b. Accounting information system
c. Chart of accounts
d. Journalizing

A

b. Accounting information system

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18
Q

Events that require recording in the financial statements because they affect assets, liabilities, or stockholders’ equity.

a. Account
b. Accounting transactions
c. Debit
d. General journal

A

b. Accounting transactions

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19
Q

A list of a company’s accounts.

a. Account
b. Accounting transactions
c. Chart of accounts
d. Trial balance

A

c. Chart of accounts

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20
Q

The right side of an account.

a. Credit
b. Debit
c. Double-entry system
d. Ledger

A

a. Credit

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21
Q

The left side of an account.

a. Accounting transactions
b. Debit
c. Double-entry system
d. General journal

A

b. Debit

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22
Q

A system that records the two-sided effect of each transaction in appropriate accounts.

a. Credit
b. Double-entry system
c. Journalizing
d. Trial balance

A

b. Double-entry system

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23
Q

The most basic form of journal.

a. Accounting transactions
b. Chart of accounts
c. Debit
d. General journal

A

d. General journal

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24
Q

A ledger that contains all asset, liability, stockholders’ equity, revenue, and expense accounts.

a. Chart of accounts
b. Debit
c. General ledger
d. Trial balance

A

c. General ledger

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25
Q

The procedure of entering transaction data in the journal.

a. Journalizing
b. Journals
c. Posting
d. T-account

A

a. Journalizing

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26
Q

An accounting record in which transactions are initially recorded in chronological order.

a. Account
b. Debit
c. General journal
d. Journals

A

d. Journals

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27
Q

The group of accounts maintained by a company.

a. Debit
b. General ledger
c. Ledger
d. Posting

A

c. Ledger

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28
Q

The procedure of transferring journal entry amounts to the ledger accounts.

a. Chart of accounts
b. Debit
c. General journal
d. Posting

A

d. Posting

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29
Q

The basic form of an account.

a. Accounting information system
b. Credit
c. General ledger
d. T-account

A

d. T-account

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30
Q

A list of accounts and their balances at a given time.

a. Account
b. Accounting information system
c. Ledger
d. Trial balance

A

d. Trial balance

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31
Q

Expenses decrease retained earnings.

True

False

A

This statement is true. The costs that a firm incurs when operating its business cause retained earnings to decrease.

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32
Q

The effect on the basic accounting equation of performing services for cash are to

increase assets and decrease stockholders’ equity.

increase assets and increase stockholders’ equity.

increase assets and increase liabilities.

increase liabilities and increase stockholders’ equity.

A

increase assets and increase stockholders’ equity.

When services are performed for cash, assets are increased and stockholders’ equity is increased

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33
Q

Genesis Company buys equipment for $900 machine on credit. This transaction will immediately affect the

income statement only.

income statement and retained earnings statement only.

balance sheet only.

income statement, retained earnings statement, and balance sheet.

A

balance sheet only.

34
Q

Which of the following events is not recorded in the accounting records?

The owner withdraws cash for personal use.

Equipment is purchased on account.

An employee is terminated.

A cash investment is made into the business.

A

An employee is terminated.

35
Q

During 2014, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders’ equity

increased $40,000.

decreased $40,000.

decreased $140,000.

increased $140,000.

A

increased $40,000.

During 2014, Gibson Company assets decreased $50,000 and its liabilities decreased $90,000. Its stockholders’ equity

36
Q

Retained earnings is decreased by

owner’s investments.

revenues.

expenses.

assets.

A

expenses

37
Q

If an expense is paid with cash

assets will decrease.

retained earnings will increase.

liabilities will increase.

expenses will decrease.

A

assets will decrease.

38
Q

If cash is received in advance from a customer

liabilities will increase.

stockholders’ equity will decrease.

retained earnings will increase.

assets will decrease.

A

liabilities will increase.

39
Q

Receipt of an unearned revenue

increases an asset; increases a liability.

increases an asset; increases a revenue.

decreases a liability; increases stockholders’ equity.

decreases a revenue; increase stockholders’ equity.

A

increases an asset; increases a liability.

40
Q

Payment of a dividend

decreases cash; increases stockholders’ equity.

decreases cash; decreases retained earnings.

increases retained earnings; increases expenses.

increases expenses; decreases cash.

A

decreases cash; decreases retained earnings.

41
Q

If a company receives cash from a customer before performing services for the customer, then

assets increase and stockholders’ equity increases.

assets increase and liabilities increase.

assets increase and liabilities decrease.

assets decrease and liabilities increase.

A

assets increase and liabilities increase.

42
Q

If total liabilities increase by $5,000 then

assets decrease by $5,000.

assets increase by $5,000, or stockholders’ equity decrease by $5,000.

stockholders’ equity increase by $5,000.

assets and stockholders’ equity each increase by $2,500.

A

assets increase by $5,000, or stockholders’ equity decrease by $5,000.

43
Q

Every account has a left or credit side and a right or debit side.

True

False

A

False

The left side is the debit side while the right side is the credit side.

44
Q

Every transaction affects at least two accounts.

True

False

A

True

There must be at least one debit, and one credit account.

45
Q

An account is a part of the financial information system and is described by all except which one of the following?

An account has a title.

An account is a source document.

An account has a debit and credit side.

An account consists of three parts.

A

An account is a source document.

46
Q

Which statement about an account is true?

There are separate accounts for specific assets and liabilities but only one account for stockholders’ equity items.

The right side of an account is the debit side.

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders’ equity items.

In its simplest form, an account consists of two parts.

A

An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders’ equity items.

47
Q

Assets are increased by credits.

True

False

A

False

48
Q

Debits

decrease assets and increase liabilities.

increase both assets and liabilities.

decrease both assets and liabilities.

increase assets and decrease liabilities.

A

increase assets and decrease liabilities.

49
Q

A revenue account

is decreased by credits.

has a normal balance of a debit.

is increased by credits.

is increased by debits.

A

is increased by credits.

50
Q

Which accounts normally have debit balances?

Assets, liabilities, and dividends

Assets, expenses, and revenues

Assets, dividends, and expenses

Assets, expenses, and retained earnings

A

Assets, dividends, and expenses

51
Q

What effects occur when an account payable is paid with cash?

Decreases stockholders’ equity and decreases liabilities

Decreases assets and increases stockholders’ equity

Increases assets and decreases liabilities

Decreases assets and decreases liabilities

A

Decreases assets and decreases liabilities

52
Q

Accounts with normal debit balances include

liabilities and expenses.

expenses and assets.

assets and liabilities.

stockholders’ equity and revenues.

A

expenses and assets.

53
Q

Accounts with normal credit balances include

revenues and expenses.

revenues and assets.

assets and liabilities.

liabilities and stockholders’ equity.

A

liabilities and stockholders’ equity.

54
Q

An account has $300 on the debit side and $900 on the credit side. How much is the account balance?

Credit of $900

Credit of $600

Debit of $600

Debit of $1,200

A

Credit of $600

When credits are greater than debits, credits minus debits results in a credit balance of $600. The debit of $300 is subtracted from the credit of $900, which results in a credit of $600.

55
Q

At September 1, 2014, Five-O Inc. reported retained earnings of $136,000. During the month, Five-O generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and paid dividends of $2,000. What is the balance in retained earnings at September 30, 2014?

$136,000 debit

$142,000 credit

$8,000 credit

$137,000 credit

A

$142,000 credit

56
Q

Which of the following is the correct sequence of events?

Analyze a transaction; post it to the ledger; record it in the journal

Analyze a transaction; record it in the journal; post it to the ledger

None of the answer choices provides the correct sequence

Record a transaction in the journal; analyze the transaction; post it to the ledger

A

Analyze a transaction; record it in the journal; post it to the ledger

57
Q

What is evidence that a transaction has occurred?

Anyone of the answer choices can be considered evidence

Journal

Source document

Ledger

A

Source document

58
Q

Which is not part of the recording process?

Posting transactions

Entering transactions in a journal

Analyzing transactions

Preparing a trial balance

A

Preparing a trial balance

59
Q

Transactions are recorded in chronological order in the journal.

True

False

A

True

60
Q

Which of these statements about a journal is false?

It helps to locate errors because the debit and credit amounts for each entry can be readily compared.

It contains only revenue and expense accounts.

It discloses the complete effect of a transaction in one place.

It provides a chronological record of transactions.

A

It contains only revenue and expense accounts.

61
Q

Which of the following is not a part of a complete journal entry?

A brief explanation of the transaction

The balance of each account affected by the transaction

The date of the transaction

The accounts and amounts to be debited and credited

A

The balance of each account affected by the transaction

62
Q

Where is the first place every transaction is recorded?

In the ledger

In the basic accounting equation

In the journal

In the respective accounts

A

In the journal

63
Q

What journal entry is recorded as a result of issuing stock to investors for cash?

A debit to Cash and a credit to Common Stock

A debit to Common Stock and a credit to Cash

A debit to Cash and a credit to Retained Earnings

A credit to Cash and a debit to Retained Earnings

A

A debit to Cash and a credit to Common Stock

64
Q

A complete journal entry does not show

the date of the transaction.

the accounts and amounts to be debited and credited.

the new balance in the accounts affected by the transaction.

a brief explanation of the transaction.

A

the new balance in the accounts affected by the transaction.

65
Q

Transactions are initially recorded in chronological order in a __________ before they are transferred to the accounts.

register

ledger

T account

journal

A

journal

66
Q

The entire group of accounts maintained by a company is referred to collectively as the journal.

True

False

A

False

The entire group of accounts maintained by a company is referred to collectively as the ledger.

67
Q

What does a general ledger of a company contain?

Asset and liability accounts only

Asset and stockholders’ equity accounts only

All the asset, liability, stockholders’ equity, revenue, and expense accounts

Revenue and expense accounts only

A

All the asset, liability, stockholders’ equity, revenue, and expense accounts

68
Q

What type of account is unearned revenue?

Expense

Liability

Revenue

Asset

A

Liability

69
Q

What is the appropriate order for a company’s chart of accounts?

Assets, liabilities, stockholders’ equity, expenses, revenue

Assets, liabilities, stockholders’ equity, revenues, expenses

Assets, liabilities, revenues, expenses, stockholders’ equity

Assets, revenues, expenses, liabilities, stockholders’ equity

A

Assets, liabilities, stockholders’ equity, revenues, expenses

70
Q

Posting

is an optional step in the recording process.

normally occurs before journalizing.

transfers journal entries to ledger accounts.

transfers ledger transaction data to the journal.

A

transfers journal entries to ledger accounts.

71
Q

If an account is debited in the journal entry, then

that account will be both debited and credited in the ledger.

that account will be credited in the ledger.

that account will be debited in the ledger.

The transactions will not balance.

A

that account will be debited in the ledger.

72
Q

Which of the following is the correct sequence of events?

Journalize; post; prepare a trial balance

Post; journalize; prepare a trial balance

Prepare a trial balance; post; journalize

Prepare a trial balance; journalize; post

A

Journalize; post; prepare a trial balance

73
Q

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates

that all accounts reflect correct balances.

no errors can be discovered.

the mathematical equality of the accounting equation.

no errors have been made.
A

the mathematical equality of the accounting equation.

74
Q

When a trial balance balances, it is an indication that

debits equal credits.

all transactions have been journalized.

all journal entries have been posted.

the account balances are correct.

A

debits equal credits.

75
Q

Accounts are listed on the trial balance in

alphabetical order.

the order that they appear in the ledger.

the order in which they are posted.

chronological order.

A

the order that they appear in the ledger.

76
Q

A trial balance

proves that all transactions have been recorded.

will not balance if a correct journal entry is posted twice.

is a list of accounts with their balances at a given time.

proves the mathematical accuracy of journalized transactions.

A

is a list of accounts with their balances at a given time.

77
Q

A trial balance will not balance if

a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

a correct journal entry is posted twice.

the purchase of supplies on account is debited to Supplies and credited to Cash.

a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.

A

a $100 cash dividend is debited to Dividends for $1,000 and credited to Cash for $100.

78
Q

Issuance of stock is an investing activity.

True

False

A

False.

This statement is false. Issuance of stock is a financing activity.

79
Q

On. Jan. 10, Novis Company purchased manufacturing equipment for $80,000 cash. What kind of activity is this?

Investing activity

Accrual activity

Operating activity

Financing activity

A

Investing activity

80
Q

In what section of the statement of cash flows would the purchase of office equipment for $10,000 appear?

Investing activities

In the notes to the statement of cash flows

Financing activities

Operating activities

A

Investing activities

81
Q

Which of the following is not one of the primary types of the financing activities in the statement of cash flows?

Issuing shares of stock

Borrowing money

Paying dividends

Buying equipment

A

Buying equipment

Accounting 2010 (5 decks)

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