Chapter 2

Question 1

T account

Answer 1

Debits on left
Credits on right

Question 2

Ledger

Answer 2

Group of accounts for an entity

Question 3

Double Entry Accounting System

Requires 3 things

Answer 3

Affects 2 accounts

At least 1 debit and credit

Debt = credits

Question 4

Journal

Answer 4

Initial transaction recording

Question 5

Journalizing

Answer 5

Process or recording in the journal

Question 6

Posting

Answer 6

Transferring debits & credits from JOURNAL~> ACCOUNTS

Question 7

Account

Answer 7

SPECIFIC asset record
Within the ledger

Question 8

Unearned revenue

Answer 8

Cash received before services are provided

Is a LIABILITY!

Question 9

Normal Balance

Answer 9

On the side that increases it.

Question 10

After eating dinner, let’s read comics

Answer 10

After eating dinner
Assets, expenses, dividends
Increase by debit

Let’s read comics
Liabilities, revenue, common stock

Question 11

Prepaid is considered a

Answer 11

Asset, until used.

Question 12

5 Steps to general journal recording

Answer 12

DDDC-P.R.

Date
Description
Debit
Credit
Posting Reference

Question 13

Net Income calculation

Answer 13

Revenue - Expenses = income

Not including dividends

Question 14

Liabilities

Answer 14

Debts owed and “payable” to outside creditors.

Accounts Payable
Notes Payable
Wages Payable
Unearned Revenue - cash/ payment before services are provided.

Question 15

Assets

Answer 15

Resources owned by a Entity

Cash
Supplies
Land / Property
Accounts Receivable
Prepaid expenses (ins.)

Patent Rights
Copyrights
Trademarks

Question 16

Revenues

Answer 16

Cash from selling services or goods.
Increase assets & Equity

Fees Earned
Fairs Earned
Commissions Earned
Rent Earned

Question 17

Stockholders Equity

Answer 17

Stockholders rights to entity’s assets.

Retained Earnings
Common Stock

Dividends DECREASE stockholders equity, as they belong to ALL of the stockholders.

Question 18

Expense

Answer 18

Cash used to generate revenue.