Chapter 2 Quiz

Question 1

Chart of Accounts

Answer 1

used to organize company accounts

Question 2

Ledger

Answer 2

a record holding all the accounts of a business, the changes in those accounts, and their balances

Question 3

Assets?

Answer 3

Cash
Accounts Receivable
Notes Receivable
Prepaid Expense
Land
Building
Equipment

Question 4

Liabilities

Answer 4

Accounts Payable
Notes Payable
Accrued Liability
Unearned Revenue

Question 5

Equity

Answer 5

Common Stock
Dividends
Revenues
Expenses

Question 6

Double Entry System

Answer 6

The system accountants use to record dual effects of each transaction

• For example, office supplies are purchased for cash requiring an increase in Office Supplies and a decrease in Cash.

Question 7

T-Account

Answer 7

A shortened form of the ledger
Left side is “Debit”
Right Side is “Credit”

Question 8

Normal Balance

Answer 8

The increase (Credit) side of an account

Question 9

Source Documents

Answer 9

Provides evidence and data for recording transactions

Question 10

Types of Source Documents

Answer 10

Purchase Invoices
Bank Check
Sales Invoices

Question 11

Journal

Answer 11

Recording of all transactions in date order

Question 12

Posting

Answer 12

process of transferring data from journal to the ledger

Question 13

Trial Balance

Answer 13

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

Order: Assets > Liabilities > Equity

Question 14

Debt Ratio

Answer 14

Shows the proportion of assets financed with debt

Debt Ratio = Total Liabilities/ Total Assets