Chapter 2

Question 1

Accounts

Answer 1

The records that are kept for the individual asset, liability, equity, revenue, expense, and dividend components are known
ex: cash, inventory

Question 2

Ledger

Answer 2

all accounts have own page/section

notebook

Question 3

Two observations

Answer 3

(1) every transaction can be described in debit/credit form

and

(2) for every transaction, debits = credits

Question 4

What is debited

Answer 4

expenses
assets
dividends
debits increase these accounts
carry a debit balance

Question 5

What is credited

Answer 5

Liabilities 
Revenues 
Equity
Capital Stock 
credits increase these accounts
carry a credit balance

Question 6

Journal

Answer 6

shorthand
book of original entry
just a log book that contains a chronological listing of a ALL company’s transactions and events
does not tell us about account balance

Question 7

Special Journal

Answer 7

for highly redundant transactions

Question 8

Post

Answer 8

To “post” means to copy the entries listed in the journal into their respective ledger accounts.

Question 9

Steps

Answer 9

•STEP 1:
Each transaction is analyzed to determine the accounts involved

•STEP 2:
A journal entry is entered into the general journal for each transaction

•STEP 3:
Periodically, the journal entries are posted to the appropriate general ledger pages

Question 10

Trial balance

Answer 10

a listing of the ledger accounts along with their respective debit or credit balances
not formal
self check

Question 11

Incorrect Trial balance

Answer 11

failing to record a transaction,
recording the same transaction twice,
posting an amount to the wrong account

Question 12

Chart of Accounts

Answer 12

A listing of all accounts in use by a particular company

Individual accounts are often given a specific reference number

Question 13

Control and Subsidiary Accounts

Answer 13

the Accounts Receivable general ledger account total is said to be the control account or control ledger, as it represents the total of all individual subsidiary account balances

Question 14

T-Accounts

Answer 14

quick and simple way to figure out how a small number of transactions and events will impact a company

Importantly, one would not use T-accounts for actually maintaining the accounts of a business

useful tool for demonstrating certain transactions and events

“scratch pad” for account analysis