Chapter 2

Question 1

A detailed record of all the increases and decreases that have occurred in an individual asset, liability, or equity during a specific period

Answer 1

Account

Question 2

A written promise that a customer will pay a fixed amount of money and interest by a certain date in the future

Answer 2

Notes Receivable

Question 3

Payment of an expense in advance

Answer 3

Prepaid Expense

Question 4

Written promise made by the business to pay a debt in the future

Answer 4

Notes Payable

Question 5

Liability that the business knows the amount owed but the bill has not been paid

Answer 5

Accrued Liability

Question 6

Liability created when a business collects cash from customers in advance of providing services

Answer 6

Unearned Revenue

Question 7

A list of all a company’s accounts with their account numbers

Answer 7

Chart of Accounts

Question 8

The record holding all the account of a business, the charges in those accounts, and their balances

Answer 8

Ledger

Question 9

System of accounting where every transaction affects at least two accounts

Answer 9

Double-Entry System

Question 10

Summary device with debits and credits

Answer 10

T-Account

Question 11

Balance that appears on the increase side of an account

Answer 11

Normal Balance

Question 12

Provides the evidence and data for accounting transactions

Answer 12

Source document

Question 13

A record of transactions in date order

Answer 13

Journal

Question 14

Transferring data from the journal to the ledger

Answer 14

Posting

Question 15

Journal entry that is characterized by having multiple debits and or multiple credits

Answer 15

Compound Journal Entry

Question 16

A list of all ledger accounts with their balances at a point in time

Answer 16

Trial Balance

Question 17

Shows the proportion of assets financed with debt. Total liabilities/Total Assets

Answer 17

Debt Ratio