Chapter 2

Question 1

Account

Answer 1

A record of increases and decreases in specific asset, liability, or owner’s equity items.

Question 2

Chart of Accounts

Answer 2

A list of accounts and the account numbers that identify their location in the ledger.

Question 3

Compound Entry

Answer 3

A journal entry that involves three or more accounts.

Question 4

Credit

Answer 4

The right side of an account.

Question 5

Debit

Answer 5

The left side of an account.

Question 6

Double-Entry System

Answer 6

A system that records in appropriate accounts the dual effect of each transaction.

Question 7

General Journal

Answer 7

The most basic form of journal.

Question 8

General Ledger

Answer 8

A ledger that contains all asset, liability, and owner’s equity accounts.

Question 9

Journal

Answer 9

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

Question 10

Journalizing

Answer 10

The entering of transaction data in the journal.

Question 11

Ledger

Answer 11

The entire group of accounts maintained by a company.

Question 12

Normal Balance

Answer 12

An account balance on the side where an increase in the account is recorded.

Question 13

Posting

Answer 13

The procedure of transferring journal entries to the ledger accounts.

Question 14

Simple Entry

Answer 14

A journal entry that involves only two accounts.

Question 15

T-Account

Answer 15

The basic form of an account, consisting of (1) a title, (2) a left or debit side, and (3) a right or credit side.

Question 16

Three-Column Form of Account

Answer 16

A form with columns for debit, credit, and balance amounts in an account.

Question 17

Trial Balance

Answer 17

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

Question 18

Which accounts are increased by debit entries?

Answer 18

Assets, Drawings, and Expenses

Question 19

Which accounts are decreased by debit entries?

Answer 19

Liabilities, Capital, and Revenues

Question 20

Which accounts are increased by credit entries?

Answer 20

Liabilities, Capital, and Revenues

Question 21

Which accounts are decreased by credit entries?

Answer 21

Assets, Drawings, and Expenses

Question 22

Which accounts typically have a debit normal balance?

Answer 22

Assets, Drawings, and Expenses

Question 23

Which accounts typically have a credit normal balance?

Answer 23

Liabilities, Capital, and Revenues

Question 24

What are the three steps of the recording process?

Answer 24

Analyze, Journalize, and Post

Question 25

Analyze

Answer 25

The first step of the recording process where we analyze each transaction for its effects on the accounts.

Question 26

Journalize

Answer 26

The second step of the recording process where we enter the transaction information into a journal.

Question 27

Post

Answer 27

The final step of the recording process where we transfer the the journal information to the appropriate accounts in the ledger.

Question 28

What are the steps of the posting process?

Answer 28

1) Enter the date, journal page, and debit amount of the accounts debited into the ledger.
2) Write the account number that was debited in the reference column of the journal.
3) Enter the date, journal page, and credit amount of the accounts credited into the ledger.
4) Write the account number that was credited in the reference column of the journal.

Question 29

What are the steps for preparing a trial balance?

Answer 29

1) List account titles and balances in appropriate debit and credit columns.
2) Total the columns.
3) Verify the equality of the columns.

Question 30

Where do $ appear?

Answer 30

In the trial balance and financial statements, only in the first item and the total of a given column.

Question 31

What does a single underline indicate? And what is it called?

Answer 31

It indicates a column of figures is to be summed, and is called a totaling rule.

Question 32

What does a double underline indicate?

Answer 32

A final sum.