chapter 2 LO1-4

Question 1

A transaction that increases an asset and a claim on assets; three types of asset source transactions are acquisitions from owners (equity), borrowings from creditors (liabilities), or earnings from operations (revenues).

Answer 1

asset source transaction

Question 2

A transaction that decreases one asset while increasing another asset so that total assets do not change; for example, the purchase of land with cash.

Answer 2

asset exchange transaction

Question 3

Expenses that are recognized before cash is paid. An example is accrued salaries expense.

Answer 3

accrued expenses

Question 4

A transaction that decreases an asset and a claim on assets; three types are distributions (transfers to owners), liability payments (to creditors), or expenses (used to operate the business).

Answer 4

asset use transaction

Question 5

Entry that updates account balances prior to preparing financial statements.

Answer 5

adjusting entry

Question 6

salary Amounts owed but not yet paid(payable) to employees for services they have already performed.

Answer 6

salaries payable

Question 7

The transaction decreases one claim and increases another so that total claims do not change. For example, the accrual of interest expense is a claims exchange transaction; liabilities increase and the recognition of the expense causes retained earnings to decrease.

Answer 7

claims exchange transaction

Question 8

Economic sacrifices (decreases in assets or increase in liabilities) are incurred in the process of generating revenue.

Answer 8

expenses

Question 9

Process of matching expenses with the revenues they produce; three ways to match expenses with revenues include matching expenses directly to revenues, matching expenses to the period in which they are incurred, and matching expenses systematically with revenues.

Answer 9

matching concept

Question 10

General, selling, and administrative costs are expensed in the period in which the economic sacrifice is made.

Answer 10

period costs