Chapter 2 LearnSmart Flashcards
The primary__________ Of financial reporting is to provide financial information about companies that is useful to capital providers for decision making.
Objective
A(n) _________ event involves an exchange between the company and a separate economic entity.
These are exchanges of assets, goods, or services by one party for assets, services, or promises to pay (liabilities) from one or more other parties. Examples include the purchase of a machine from a supplier,
sale of merchandise to customers, borrowing of cash from a bank, and
investment of cash in the business by the owners.
External
Which of the following is used to record the summary of effects on one particular item?
O A general journal
O An account
O A trial balance
O A general ledger
An account
Which statement is correct regarding entering transactions into the accounting equation?
O If total assets are increased, then liabilities only are increased as well.
O If one account is credited, then at least one other account must be credited as well.
O If total assets increased, then the total of liabilities plus stockholders’ equity must also have increased.
O If one asset account is increased, then another asset account must be decreased in order for the left side of the accounting equation to be balanced.
If total assets increased, than the total of liabilities plus stockholders’ equity must’ve also increased.
When a business issues common stock, what does it give to its owners?
- cash
- retained earnings
- promissory notes
- stock certificates
Stock certificates
Which of the following accounting cycle steps describes the summarizing in ledger accounts?
- Transactions are recorded chronologically showing the accounts and debited along with the corresponding accounts credited.
- Dollar amounts from journal entries are copied (posted) to the appropriate accounts in the ledger, so that account balances can be totaled.
- A list of accounts and ending balances is checked to be sure total debts equal total credits.
Dollar amounts from journal entries are copied (posted) to the appropriate accounts in the ledger, so that account balances can be totaled.
Number 1 is not correct because this describes the journal, not the ledger.
Number 2 it’s not correct because this describes the trial balance, not the ledger.
Which
Which
