Chapter 2

Question 1

An accounting form that is used to record the increases and decreases in each financial statement item.

Answer 1

Account

Question 2

A claim against the customer created by selling merchandise or services on credit.

Answer 2

Account Receivable

Question 3

The resources owned by a business.

Answer 3

Assets

Question 4

The amount of the difference between the debits and the credits that have been entered into an account.

Answer 4

Balance of the Account

Question 5

An account used for a proprietorship that represents the owner’s equity.

Answer 5

Capital Account

Question 6

A list of the accounts in the ledger.

Answer 6

Chart of Accounts

Question 7

An entry that is prepared when an error has already been journalized and posted.

Answer 7

Correcting Journal Entry

Question 8

Amounts entered on the right side of an account.

Answer 8

Credits

Question 9

Amounts entered on the left side of an account.

Answer 9

Debits

Question 10

A system of accounting for recording transactions, based on r_ecording increases and decreases in accounts_ so that debits equal credits.

Answer 10

Double-Entry Accounting System

Question 11

The account used to record amounts withdrawn by an owner of a proprietorship.

Answer 11

Drawing

Question 12

Assets used up or services consumed in the process of generating revenues.

Answer 12

Expenses

Question 13

Financial analysis that compares an item in a current statement with the same item in prior statements.

Answer 13

Horizontal Analysis

Question 14

The intial record in which the effects of a transaction are recorded.

Answer 14

Journal

Question 15

The form of recording a transaction in a journal.

Answer 15

Journal Entry

Question 16

The process of recording a transaction in the journal.

Answer 16

Journalizing

Question 17

A group of accounts for a business.

Answer 17

Ledger

Question 18

The rights of creditors that represent debts of the business.

Answer 18

Liabilities

Question 19

The normal balance of an account can be either a debit or a credit depending on whether increases in the account are recorded as debits or credits.

Answer 19

Normal balance of an account

Question 20

The owner’s right to the assets of the business.

Answer 20

Owner’s Equity

Question 21

The process of transferring the debits and credits from the j_ournal entries to the accounts_.

Answer 21

Posting

Question 22

Increases in owner’s equity as a result of selling services or products to customers.

Answer 22

Revenues

Question 23

In the double-entry accoutning system, specific rules for recording debits and credits based on the type of account.

Answer 23

Rules of Debit and Credit

Question 24

An error in which the entire number is moved one or more spances to the left or the right, such as writing $542.00 as $54.20 or $5,420.00.

Answer 24

Slide

Question 25

The simplest form of an account.

Answer 25

T Account

Question 26

An error in which the order of the digits is changed, such as writing $542 as $452 or $524.

Answer 26

Transposition

Question 27

A summary listing of the titles and balances of accounts in the ledger.

Answer 27

Trial Balance

Question 28

A summary listing of the _titles and balances of account_s in the ledger prior to the posting of adjusting entries.

Answer 28

Adjusted Trial Balance

Question 29

A summary listing of the titles and balances of accounts in the ledger prior to the posting of adjusting entries.

Answer 29

Unadjusted Trial Balance

Question 30

The liability created by receiving revenue in advance.

Answer 30

Unearned Revenue