CHAPTER 2

Question 1

The basic summary device of accounting is the

Answer 1

account

Question 2

an _______________ may be define as a detailed record of the increases, decreases and balance of each element that appears in an entity’s financial statements.

Answer 2

ACCOUNT

Question 3

The most basic tool of accounting is the __________________

Answer 3

accounting equation.

Question 4

Basic accounting models is:

Answer 4

Assets = Liabilities + Owner’s Equity

Question 5

opposite manner

Answer 5

mirror image

Question 6

which means that the dual effects of a business transaction is recorded.

Answer 6

double entry system

Question 7

abbreviations for debit and credit are:

Answer 7

Dr. (from the Latin debere) and Cr. (from the latin credere), respectively.

Question 8

is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected to flow to the enterprise.

Answer 8

ASSETS

Question 9

control is the ability to obtain the economic benefits and to restrict the access of others.

Answer 9

“Controlled by the enterprise”

Question 10

the event must be passed before an asset can arise.

Answer 10

Past events”

Question 11

is a present ion of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits.

Answer 11

LIABILITY

Question 12

is the residual interest in the assets of the enterprise after deducting all its liabilities.

Answer 12

EQUITY

Question 13

is increase in economic benefits during the accounting period in the form of inflows or enhancements of assets or decrease of liabilities that results in increases in equity, other than those relating to contributions from equity participants.

Answer 13

INCOME

Question 14

represent increases in economic benefits and as such are no different in nature from revenue. Hence, they are not regarded as constituting a separate element.

Answer 14

Gains

Question 15

are decrease in economic benefits during the accounting period in the form of outflows or depletions of assets or incurrences of liabilities that result in decreases in equity.

Answer 15

EXPENSES

Question 16

represent other that meet the definition of expenses and may or may not, arise in the course of the ordinary activities of an enterprise.

Answer 16

Losses

Question 17

is any medium of exchange that a bank will accept for deposit at face value. It includes coins, currency, checks, money orders, bank deposit and drafts.

Answer 17

Cash

Question 18

these are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Answer 18

Cash Equivalents

Question 19

A note receivable is a written pledge that the customer will pay the business a fixed amount of money on a certain date.

Answer 19

Notes Receivable

Question 20

These are claims against customers arising from sale for services or goods on credit. This type of receivable offers less security than a promissory note.

Answer 20

Accounts Receivable

Question 21

these are assets which are (a) held for sale in the ordinary course of business; (b) in the process of production for such sale

Answer 21

Inventories

Question 22

These are expenses paid for by the business advance.

Answer 22

Prepaid Expenses

Question 23

these are tangible assets that are held by an enterprise for use in the production or supply of goods or services, or for rental to others, or for administrative purposes and which are expected to be used during more than one periods.

Answer 23

Property, Plant and Equipment

Question 24

It is a contra account that contains the sum of the periodic depreciation charges.

Answer 24

Accumulated Depreciation

Question 25

CURRENT ASSETS

Answer 25

Cash
Cash Equivalents
Accounts Receivable
Inventories
Prepaid Expenses

Question 26

Non-Curent Assets

Answer 26

Property, Plant Equipment
Accumulated Depreciation
Intangible Assets

Question 27

CURRENT LIABILITIES

Answer 27

ACCOUNTS PAYABLE
NOTES PAYABLE
ACCRUED LIABILITIES
UNEARNED REVENUES
CURRENT PORTION OF LONG-TERM DEBT

Question 28

NON-CURRENT LIABILITIES

Answer 28

MORTGAGE PAYABLE
BONDS PAYABLE

Question 29

OWNER’S EQUITY

Answer 29

CAPITAL
WITHDRAWALS
INCOME SUMMARY

Question 30

INCOME STATEMENT

Answer 30

SERVICE INCOME
SALES

Answer 31

Cost of Sales
Salaries or Wages Expense
Telecommunications, Electricity, Fuel and Water Expenses. Expenses
Rent Expense
Supplies Expense
Insurance Expense
Depreciation Expense
Uncollectible Accounts Expense
Interest Expense

Question 32

An ________________ is an economic occurrence that causes changes in an enterprise’s assets, liabilities, and/or equity. Events may be internal actions, such as the use of equipment for the production of goods or services. It can also be an external event, such as the purchase of raw materials from a supplier.

Answer 32

accounting event

Question 33

A _____________ is a particular kind of event that involves the transfer of something of value between two entities. Examples of transactions include acquiring assets from owner(s), borrowing funds from creditors, and purchasing or selling goods and services.

Answer 33

transaction

Question 34

A _______________ is the occurrence of an event or a condition that affects financial position and can be reliably recorded.

Answer 34

business transaction

Question 35

The ______________ is a form used to analyze increases and decreases in the assets, liabilities or owner’s equity of a business entity.

Answer 35

financial transaction worksheet

Question 36

The ________________ refers to a series of sequential steps or producers performed to accomplish the accounting process.

Answer 36

Accounting Cycle