Chapter 2: Analyzing Transactions

Question 1

account

Answer 1

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

Question 2

assets

Answer 2

The resources owned by a business that can provide the company with future benefits.

Question 3

balance of the account

Answer 3

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

Question 4

capital account

Answer 4

In a proprietorship, the account that represents the owner’s equity.

Question 5

chart of accounts

Answer 5

A list of the accounts in the ledger.

Question 6

compound journal entry

Answer 6

A journal entry that has more than one debit entry or more than one credit entry.

Question 7

correcting journal entries

Answer 7

Entries that are prepared when an error has already been journalized and posted.

Question 8

credit

Answer 8

Amount entered on the right side of an account.

Question 9

debit

Answer 9

Amount entered on the left side of an account.

Question 10

double-entry accounting system

Answer 10

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

Question 11

drawings

Answer 11

The account used to record amounts withdrawn by an owner of a proprietorship. Also known as withdrawals.

Question 12

expenses

Answer 12

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

Question 13

journal

Answer 13

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

Question 14

journal entry

Answer 14

The for of recording a transaction in a journal.

Question 15

journalizing

Answer 15

The process of recording a transaction in the journal.

Question 16

ledger

Answer 16

A group of accounts for a business.

Question 17

liabilities

Answer 17

The rights of creditors that represent debts of the business.

Question 18

normal balance of an account

Answer 18

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.

Question 19

owner’s equity

Answer 19

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

Question 20

posting

Answer 20

The process of transferring the debits and credits from the journal entries to the accounts.

Question 21

revenues

Answer 21

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

Question 22

rules of debit and credit

Answer 22

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

Question 23

slide

Answer 23

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

Question 24

T account

Answer 24

The simplest form of an account.

Question 25

transposition

Answer 25

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

Question 26

trial balance

Answer 26

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

Question 27

unadjusted trial balance

Answer 27

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

Question 28

unearned revenue

Answer 28

The liability created by receiving cash in advance of earning the revenue.

Question 29

withdrawals

Answer 29

The account used to record amounts withdrawn by an owner of a proprietorship. Also known as drawings.

Question 30

# What does this define? An accounting form that is used to record the increases and decreases in each financial statement item.

Answer 30

account

Question 31

# What does this define? The resources owned by a business that can provide the company with future benefits.

Answer 31

assets

Question 32

# What does this define? The amount of the difference between the debits and the credits that have been entered into an account.

Answer 32

balance of the account

Question 33

# What does this define? In a proprietorship, the account that represents the owner's equity.

Answer 33

capital account

Question 34

# What does this define? A list of the accounts in the ledger.

Answer 34

chart of accounts

Question 35

# What does this define? A journal entry that has more than one debit entry or more than one credit entry.

Answer 35

compound journal entry

Question 36

# What does this define? Entries that are prepared when an error has already been journalized and posted.

Answer 36

correcting journal entries

Question 37

# What does this define? Amount entered on the right side of an account.

Answer 37

credit

Question 38

# What does this define? Amount entered on the left side of an account.

Answer 38

debit

Question 39

# What does this define? A system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits.

Answer 39

double-entry accounting system

Question 40

# What does this define? The account used to record amounts withdrawn by an owner of a proprietorship. Also known as withdrawals.

Answer 40

drawings

Question 41

# What does this define? Assets used up or services consumed in the process of generating revenues.

Answer 41

expenses

Question 42

# What does this define? The initial record in which the effects of a transaction are recorded.

Answer 42

journal

Question 43

# What does this define? The for of recording a transaction in a journal.

Answer 43

journal entry

Question 44

# What does this define? The process of recording a transaction in the journal.

Answer 44

journalizing

Question 45

# What does this define? A group of accounts for a business.

Answer 45

ledger

Question 46

# What does this define? The rights of creditors that represent debts of the business.

Answer 46

liabilities

Question 47

# What does this define? Can be either a debit or a credit depending on whether increases in the account are recorded as debits or credits.

Answer 47

normal balance of an account

Question 48

# What does this define? The owner's right to the net assets of the business.

Answer 48

owner's equity

Question 49

# What does this define? The process of transferring the debits and credits from the journal entries to the accounts.

Answer 49

posting

Question 50

# What does this define? Increases in owner's equity as a result of selling services or products to customers.

Answer 50

revenues

Question 51

# What does this define? In the double-entry accounting system, specific rules for recording debits and credits based on the type of account.

Answer 51

rules of debit and credit

Question 52

# What does this define? An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 as $54.20 or $5,420.00.

Answer 52

slide

Question 53

# What does this define? The simplest form of an account.

Answer 53

T account

Question 54

# What does this define? An error in which the order of the digits is exchanged, such as writing $542 as $452 or $524.

Answer 54

transposition

Question 55

# What does this define? A summary listing of the titles and balances of accounts in the ledger.

Answer 55

trial balance

Question 56

# What does this define? A summary listing of the titles and balances of accounts in the ledger prior to the posting of adjusting entries.

Answer 56

unadjusted trial balance

Question 57

# What does this define? The liability created by receiving cash in advance of earning the revenue.

Answer 57

unearned revenue

Question 58

# What does this define? The account used to record amounts withdrawn by an owner of a proprietorship. Also known as drawings.

Answer 58

withdrawals

Question 59

Debit or Credit - assets?

Answer 59

Debit account

Question 60

Debit or Credit - liabilities?

Answer 60

credit account

Question 61

Debit or Credit - owner's capital?

Answer 61

credit account

Question 62

Debit or Credit - owner's withdrawal?

Answer 62

debit account

Question 63

Debit or Credit - revenue accounts?

Answer 63

credit account

Question 64

Debit or Credit - expense account?

Answer 64

debit account

Question 65

Is an increase to an asset account a debit or credit?

Answer 65

debit

Question 66

Is an increase to an liability account a debit or credit?

Answer 66

credit

Question 67

Is an increase to an owner's capital account a debit or credit?

Answer 67

credit

Question 68

Is an increase to an owner's withdrawl account a debit or credit?

Answer 68

debit

Question 69

Is an increase to a revenue account a debit or credit?

Answer 69

credit

Question 70

Is an increase to a expense account a debit or credit?

Answer 70

debit

Question 71

Is a decrease to an asset account a debit or credit?

Answer 71

credit

Question 72

Is a decrease to an liability account a debit or credit?

Answer 72

debit

Question 73

Is a decrease to an owner's capital account a debit or credit?

Answer 73

debit

Question 74

Is a decrease to an owner's withdrawl account a debit or credit?

Answer 74

credit

Question 75

Is a decrease to a revenue account a debit or credit?

Answer 75

debit

Question 76

Is a decrease to a expense account a debit or credit?

Answer 76

credit

Question 77

What are the 10 steps in the accounting cycle?

Answer 77

1. Source documents arrive 2. Journal entries are recorded 3. Transactions are posted to accounts 4. Unadjusted trial balance is prepared 5. Optional work sheet is prepared 6. Adjusting entries are journalized and posted 7. Adjusted trial balance is prepared 8. Financial statements are prepared 9. Closing entries are journalized and posted 10. Post-closing trial balance is prepared