Acct 2121 CHPT 3

Question 1

What is the Accounting Information System?

Answer 1

The system used to collect and process transactions data and communicate financial information, Can vary depending on type of business and its transactions, size of company, amount of data, information needed by management

Question 2

What are the steps in Recording Process?

Answer 2

1. Analyze each transaction to determine its effect on account, 2. Record transaction as a journal entry, 3. Post journal entries in general ledger, 4. Prepare a trial balance

Question 3

What are recorded in Accounting Transactions?

Answer 3

Only events that change assets, liabilities, or shareholders’ equity accounts require an entry

Question 4

What are transactions?

Answer 4

Economic events that must be recorded in the financial statements

Question 5

What are Analyzing Transactions?

Answer 5

determines impact on the accounting equation

Question 6

What are Accounts used for?

Answer 6

to keep track of the increases and decreases in each specific asset, liability, or shareholders’ equity item, also used to keep track of opening and closing balances

Question 7

Three parts of T account

Answer 7

1) Title of account ( cash , inventory, accounts payable) 2) Debit side (left side) 3) Credit side (Right side)

Question 8

what is a Credit or Debit Balance?

Answer 8

If greater sum on right it is credit balance, if greater sum on left it is debit balance

Question 9

Expanded Accounting Equation?

Answer 9

Assets (DR+, Cr-)= Liabilities (Dr-, Cr+)+ Common shares(Dr-, Cr+) +Retained earnings ( Dr-, Cr+) + Revenues (Dr-, Cr+) - Expenses (Dr+, Cr-) - Dividends Declared (Dr+, Cr-)

Question 10

Where are Journal entries recorded?

Answer 10

in the General Journal

Question 11

What is Posting?

Answer 11

the process of transferring journal entries from the general journal to the general ledger accounts

Question 12

What are chart of accounts?

Answer 12

list of all accounts maintained by a company

Question 13

What is a trial Balance ?

Answer 13

prepare a list of all accounts and their balances at a specific point in time, Sum of debits= sum of credits

Question 14

Limitations of Trial balance?

Answer 14

Does not prove that the general ledger is correct, missing transactions, incorrect accounts, duplicate postings

Question 15

7 steps in Accounting Cycle

Answer 15

Analyze Transactions, Journal entries, post, trial balance, adjusting entries, adjusted trial balance, Financial statements