CH 3

Question 1

Define Accounting information system

Answer 1

a. Collections and processes of transactions to disseminates the financial information to interested parties

Question 2

Define event

Answer 2

a. A happening of consequence that is caused by changes in assets, liabilities, an equity
b. Can be internal or external events.

Question 3

Define transaction

Answer 3

a. External event involving a transfer or exchange between two or more entities

Question 4

Define account

Answer 4

a. An systematic arrangement that shows the effect of transactions and other events on a specific elements.
b. Ex: T account

Question 5

Define real accounts

Answer 5

a. Assets
b. Liabilities
c. Equity

Question 6

Define nominal accounts

Answer 6

a. Revenue
b. Expense
c. Dividend
i. All are closed periodically

Question 7

Define Ledger

Answer 7

a. The book containing the accounts

Question 8

Define Subsidiary ledger

Answer 8

a. Details related to a given ledger account

Question 9

Define journal

Answer 9

a. The book of original entry where the company initially records transactions and selected other events

Question 10

Define positing

Answer 10

a. The process of transferring the essential facts and figures from the book or original entry to the ledger.

Question 11

Define trail balance

Answer 11

a. The list of all open accounts in the ledge and their balances

Question 12

Define adjusted trail balances

Answer 12

a. Trail balance taken immediately after all adjustments have been posted

Question 13

Define adjusting entries

Answer 13

a. Entries make at the end of an accounting period to bring all accounts up to date on an accrual basis.

Question 14

Define Financial statements

Answer 14

a. Statements that reflect the collection, tabulation, and final summarization of the accounting data.

Question 15

Define balance sheet

Answer 15

a. Shows the financial condition of the enterprise at the end of a period

Question 16

Define income statement

Answer 16

a. Measures the results of operations during a period

Question 17

Define Statement of cash flows

Answer 17

a. Cash provided and used by operating, investing , and financing activities during the period

Question 18

Define statement of retain earnings

Answer 18

a. Reconciles the balance of the retained earning account from the beginning to the end of the period.

Question 19

Define closing entries

Answer 19

a. Formal process by which the enterprise reduces all nominal accounts to zero and determines and transfers the net income or net loss to an owner’s equity account.

Question 20

21) Define Double entry system

Answer 20

a. a company records the dual (two-sided) effect of each transaction in ap