Chapter 2

Question 1

account

Answer 1

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

Question 2

notes receivable

Answer 2

a written promise that a customer will pay a fixed amount plus interest by a certain date in the future

Question 3

prepaid expense

Answer 3

a payment of an expense in advance

asset for future benefit

Question 4

notes payable

Answer 4

a written promise to pay a debt with interest in the future

Question 5

accrued liability

Answer 5

a liability for which the business knows the amount owed but the bill has not been paid

Question 6

unearned revenue

Answer 6

a liability created when a business collects cash from customers before providing goods or services.

Question 7

chart of accounts

Answer 7

a list of all the companies accounts and account numbers

Question 8

ledger

Answer 8

a listing of the accounts with increases, decreases,and balances as of a specific point in time

Question 9

double entry accounting

Answer 9

every transaction affects two accounts

Question 10

t account

Answer 10

a chart showing debits in the left and credits on the right in an account

Question 11

normal balance

Answer 11

appears in the side where we record an increase in balance

non normal indicates error

Question 12

source documents

Answer 12

provides evidence and data for transactions

Question 13

journal

Answer 13

record of transactions in order by date

Question 14

posting

Answer 14

transferring days from the journal to the ledger

Question 15

compound journal entry

Answer 15

journal entry that has multiple debits and credits

Question 16

debt ratio

Answer 16

proportion of assets financed with debt total liabilities divided by total assets

Question 17

trial balance

Answer 17

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