Chapter 2

Question 1

A record of increases and decreases in specific asset, liability, or owner’s equity items.

Answer 1

account

Question 2

what are the three parts of an account?

Answer 2

• title
• debit side (left)
• credit side (right)

Question 3

The basic form of an account (called this because it resembles the form of a T.

Answer 3

t account

Question 4

The left side of an account. (positive money)

Answer 4

debit

Question 5

The right side of an account. (negative money)

Answer 5

credit

Question 6

A system that records in appropriate accounts the dual effect of each transaction.

Answer 6

double entry system

Question 7

An account balance on the side where an increase in the account is recorded

Answer 7

normal balance

Question 8

Within the expanded Accounting equation, how do the debits and credits fall for each specific element?

Answer 8

Assets: DR +, CR -
Liabilities: DR - CR +
Owner's Capital: DR - CR +
Owner's Drawings: DR + CR -
Revenues: DR - CR +
Expenses: DR + CR -

Question 9

An accounting record in which transactions are initially recorded in chronological order.

Answer 9

journal

Question 10

The most basic form of journal that every company has

Answer 10

general journal

Question 11

what are the three reasons that a general journal makes a significant contribution to the recording process?

Answer 11

• It discloses in one place the complete effects of a transaction
• It provides a chronological record of transactions
• It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared

Question 12

The entering of transaction data in the journal.

Answer 12

journalizing

Question 13

What does a complete journal entry consist of?

Answer 13

• The date of the transaction
• The accounts and amount to be debited and credited
• A brief explanation of the transaction

Question 14

A journal entry that involves only two accounts.

Answer 14

simple entry

Question 15

A journal entry that involves three or more accounts.

Answer 15

compound entry

Question 16

The entire group of accounts maintained by a company.

Answer 16

ledger

Question 17

A ledger that contains all asset, liability, and owner’s equity accounts.

Answer 17

general ledger

Question 18

The procedure of transferring journal entries to the ledger accounts.

Answer 18

posting

Question 19

what are the steps for posting?

Answer 19

• In the ledger, in the appropriate columns of the accounts debited, enter the date, journal page, and debit amount shown in the journal
• In the reference column of the journal, write the account number to which the debit amount was posted
• In the ledger, in the appropriate columns of the account credited, enter the date, journal page, and credit amount shown in the journal.
• In the reference column of the journal, write the account number to which the credit amount was posted.

Question 20

A list of accounts and the account numbers that identify their location in the ledger.

Answer 20

charts of accounts

Question 21

A list of accounts and their balances at a given time.

Answer 21

trial balance

Question 22

when do companies prepare a trial balance?

Answer 22

at the end of an accounting period

Question 23

what are the steps for preparing a trial balance?

Answer 23

• List the account titles and their balances in the appropriate debit or credit column
• Total debit and credit columns
• Prove the equality of the two columns.

Question 24

what do yo do if you are faced with a trial balance that does not balance?

Answer 24

• Determine the difference between the two columns
• If the error is $1,$10, $100, or $1000 re add the trial balance columns and recompute the account balances
• If the error is divisible by 2, scan the trial balance to see whether ta balance equal to half the error has been entered in the wrong column
• If the error is divisible by 9, retrace the account balance to see whether they are incorrectly copied from the ledger. Ex: $21 instead of $12
• If the error is not divisible by 2 or 9, scan the ledger to see whether an account balance in the amount of the error has been omitted from the trial balance and scan the journal to see whether a posting of that amount has been omitted

Question 25

Where can dollar signs appear?

Answer 25

trial balances and financial statements ( they are not shown in journals or ledgers)

Question 26

is an expense a debit or a credit?

Answer 26

Debit

Question 27

what provides evidence of a transaction?

Answer 27

business documents such as a sales receipt a check or bill

Question 28

what is the purpose of transaction analysis?

Answer 28

to identify the type of account involved and then to determine whether to make a debit or credit to the account