Chapter 2 Test 1

Question 1

What accounts are permanent accounts

Answer 1

Balance sheet, they remain open with no zero balances at the end of the reporting period.

Question 2

What are temporary accounts

Answer 2

income statement accounts because they have a zero balance at the end of the reporting period.

Question 3

Typical Asset Accounts

Left Side Increase

Answer 3

• Cash
• Accounts Recievable
• Notes Recievable
• Interest Recievable
• Inventory
• Advances to Suppliers
• Prepaid Rent
• Prepaid Insurance
• Investments in Securities
• land
• Buildings
• Equipment
• Furniture and fixtures
• accumulated depreciation
• Patents
• Goodwill

Question 4

Typical Liability Accounts

Right Side Increase

Answer 4

• Accounts Payable
• Notes Payable
• Interest Payable
• Income Taxes Payable
• Advances from Customers
• Advan. from tenants or rent in advanced
• Mortgage Payable
• Bonds Payable
• Deferred Income Taxes

Question 5

Typical Shareholder Equity Accounts

Right Side Increase?

Answer 5

• Common stock (at par)
• Additional Paid in Capital
• Preferred Stock
• Retained Earnings
• Accumulated Other Comprehensive Income

Question 6

Current Assets/Liabilities

Answer 6

Use in one year or less

Question 7

Noncurrent Assets/Liabilities

Answer 7

Use in more than one year

Question 8

Balance Sheet Equation

Answer 8

Assets = Liabilities + Shareholders Equity

Question 9

Debit

Answer 9

Record entry on the left side of an account

Question 10

Credit

Answer 10

record an entry on the right side

Question 11

Contra Accounts

Answer 11

?

Question 12

journal entry

Answer 12

standardized format to indicate the accounts and amounts affected by each transaction