Chapter 2

Question 0

Nominal accounts

Answer 0

Accounts that are closed- income statement accounts- rev/exp- closed to oe/re

Question 1

Account

Answer 1

Summarizes the effects of transactions on each element of the expanded accounting equation

Question 2

Transactions

Answer 2

The transfer or exchange if goods or services

Question 3

Are dividends reported on the income statement?

Answer 3

No, even though they are an expense. They reduce retained earnings.

Question 4

General ledger

Answer 4

Includes all accounts that appear on the financial statements

Question 5

Subsidiary ledgers

Answer 5

Additional detail of general ledger accounts

Question 6

Trial balance

Answer 6

Lusts all accounts and their balanced

Only for internal users.

Question 7

Adjusting entries

Answer 7

At the end of the period there may be adjusting entries needed to correct:

Un recorded assets
Unrecorded liabilities

Prepaid expenses
Unearned revenues

Question 8

When should revenues be recorded?

Answer 8

When earned regardless of when cash is received

Question 9

Unrecorded receivable

Answer 9

Earned revenues that is receivable in the future and should be recorded as assets

Question 10

Journal entry for accrued interest on notes receivable

Answer 10

Debit- interest receivable

Credit- interest revenue

Question 11

Unrecorded liabilities

Answer 11

Expenses being incurred prior to being paid or recorded. Should be recorded when incurred no matter when they are paid.

Question 12

Record accrued salaries and wages

Answer 12

Salaries and wages exp-debit

Salaries and wages payable-credit

Question 13

Record accrued interest on ponds

Answer 13

Interest exp-debit

Interest payable-credit

Question 14

Record income taxes

Answer 14

Income tax expense-debit

Income tax payable-credit

Question 15

Prepaid expenses

Answer 15

Payments companies make in advance (needs an adjusting entry to record what was actually incurred for the period and what is left for the future)

Question 16

Unearned revenues

Answer 16

Amounts received before the actual earning if revenues -they are a liability

Question 17

Adjusted entries for unearned revenues

Answer 17

Depends of unearned revenue was recorded as a credit to a liability account or revenue account:

Liability: unearned blah rev-debit
Blah revenue -credit

Revenue: blah revenue-debit
Unearned blah rev-credit

Question 18

Record depreciation

Answer 18

Depreciation exp-debit

Accumulated depr-credit