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FINANCIAL ACCOUNTING > Chapter II > Flashcards

Chapter II Flashcards

1
Q

Account

A

A record of inc and dec in a spec asset, liability, equity, revenue, or expense item.

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2
Q 
Debit = Left
Credit = ?
A

Right

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3
Q

Describe parts of a T-account.

A

(a) title
(b) Dr. side (Left)
(c) Cr. side (Right)

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4
Q

“Dr. and Cr. mean inc and dec respectively.” Agree or not? Explain.

A

Disagree. Debit and credit mean left and right respectively.

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5
Q

Double-entry system

A
  • Each trans must affect 2 or more acc to keep basic acc equa in balance.
  • Rec done by Dr. at least 1 acc and Cr. another.
  • DEBITS = CREDITS (must)
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6
Q

normal balance

A

acc balance on inc side.

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7
Q

Assets - Dr. > Cr.

Liabilities - ???

A

Cr. > Dr.

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8
Q

Recording process

A
  • Analyze each trans
  • Enter trans in JOURNAL
  • Transfer journal info to LEDGER accounts
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9
Q

Business documents

A

such as sales slip, check, bill, cash register tape

to provide evidence of trans

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10
Q

Journal (Nhật kí chung)

A
  1. Book of original entry.
  2. Trans recorded in chronological order.
  3. Contribute to rec process:
    - Discloses “complete effects of trans”.
    - Provides “chronological record” of transactions.
    - Helps to “prevent or locate errors” because Dr. and Cr. can be easily compared.
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11
Q

General Ledger (Sổ cái)

A

contain entire group of acc (assets, liabilities, stockholders; equity) maintained by comp

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12
Q

Posting

A

Process transfer journal entries to ledger acc

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13
Q

Chart of Accounts

A

Acc and acc numbers arranged in sequence in which presented in fin statemt

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14
Q

The Recording Process Illustrated

A
  1. Determine what type of acc is involved.
  2. Determine what items inc or dec and how much.
  3. Translate inc and dec into Dr. and Cr.
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15
Q

Trial balance is still correct even when?

A
  1. Trans not journalized.
  2. Correct journal entry not posted.
  3. Journal entry posted twice.
  4. Incorrect acc are used in journalizing or posting.
  5. Offsetting errors
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16
Q 
Acc having Dr. bal are:
A. assets, expenses, and revenues.
B. assets, expenses, and equity.
C. assets, liabilities, and dividends.
D. assets, dividends, and expenses.
A

D

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17
Q

Posting:
A. occurs before journalizing.
B. transfers ledger trans data to journal.
C. is optional step in rec process.
D. transfers journal entries to ledger accounts.

A

D

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18
Q

Trial bal won’t bal if:
A. Correct journal entry is posted twice.
B. Dr. to Supplies and Cr. to Cash.
C. Dr. to Div for $100 and Cr. to Cash for $100.
D. Dr. to Acc Payable for $45 and Cr. to Cash for $45.

A

C

19
Q
  1. Which about acc is true?
    (a) In simplest form, acc consists of 2 parts.
    (b) Acc is individual acc rec of inc and dec in spec ass, lia, SE.
    (c) There are separate acc for spec ass and lia but only 1 acc for SE.
    (d) Left side of acc is Cr. or Dr. side.
A

B

20
Q
  1. Dr.
    (a) inc both ass and lia.
    (b) dec both ass and lia.
    (c) inc ass and dec lia.
    (d) dec ass and inc lia.
A

C

21
Q
  1. Rev acc:
    (a) inc by Dr.
    (b) dec by Cr.
    (c) has normal bal of Dr.
    (d) inc by Cr.
A

D

22
Q
  1. Which not part of rec process?
    (a) Analyzing trans.
    (b) Preparing trial bal.
    (c) Entering trans in journal.
    (d) Posting trans
A

B

23
Q
  1. Which about journal is false?
    (a) Not a book of original entry.
    (b) Provide chronological rec of trans.
    (c) Help locate errors bec Dr. and Cr. each entry can be compared.
    (d) Discloses in 1 place complete effect of trans.
A

A

24
Q
  1. Purchase of supplies on acc =>
    (a) Dr. to Supplies Expense and Cr. to Cash.
    (b) Dr. to Supplies Expense and Cr. to Acc Payable.
    (c) Dr. to Supplies and Cr. to Acc Payable.
    (d) Dr. to Supplies and Cr. to Acc Receivable.
A

C

25
Q
  1. Order of acc in ledger is:
    (a) assets, revenues, expenses, liabilities, common
    stock, dividends.
    (b) assets, liabilities, common stock, dividends,
    revenues, expenses.
    (c) common stock, assets, revenues, expenses, liabilities, dividends.
    (d) revenues, assets, expenses, liabilities, common
    stock, dividends.
A

B

26
Q
  1. Ledger:
    (a) contains only asset and lia acc.
    (b) show acc in alphabet order.
    (c) collection of entire group of acc maintained by comp
    (d) a book of original entry.
A

C

27
Q
  1. Before posting payment of $5,000, Acc Payable of Corp. had normal bal of $18,000. Bal after posting this trans was:
    (a) $13,000. (c) $23,000.
    (b) $5,000. (d) Cannot be determined.
A

A

28
Q
  1. Trial balance:
    (a) list of acc with their bal at a given time.
    (b) proves mathematical accuracy of journalized
    trans.
    (c) won’t bal if correct journal entry is posted twice.
    (d) prove all trans have been rec.
A

A

29
Q
  1. Trial bal of Corp. had acc with normal bal:
    Cash $5,000, Rev $85,000, Acc Payable $4,000, Exp $50,000, CS $42,000, Div $13,000 and Equip $61,000. In preparing trial bal, total in Dr. column is:
    (a) $116,000. (c) $129,000.
    (b) $118,000. (d) $131,000.
A

C

Cash + Exp + Div + Equip

30
Q
  1. Is “Dr. bal are favorable and Cr. bal are unfavorable” correct?
A

INCORRECT. Dr. bal = Dr. > Cr, in 1 acc (vice versa)

=> Not favorable/unfavorable

31
Q
  1. Rules of Dr. and Cr. as applied to
    (a) ass acc (Supplies, Equip, Acc Rececivable, Cash)
    (b) lia acc (Acc payable, Note payable)
    (c) SE acc (rev, exp, div, CS and RE)
A

(a) All inc by Dr. and dec by Cr.
(b) All dec by Dr. and inc by Cr.
(c) SE, CS, RE, Rev dec by Dr. and inc by Cr.
Exp, Div inc by Dr. and dec by Cr.

32
Q
  1. Indicate acc Dr. and Cr.
    (a) Supplies are purchased on account.
    (b) Cash is received on signing note payable.
    (c) Employees are paid salaries in cash.
A

(a) Dr. Supplies, Cr. Acc Payable
(b) Dr. Cash, Cr. Note payable
(c) Dr. Exp, Cr. Cash

33
Q
  1. What basic steps in rec process?
A

(1) Analyze each trans for its effect on acc.
(2) Enter trans info in journal.
(3) Transfer journal info to appropriate acc in ledger.

34
Q
  1. What adv of using journal in rec process?
A

(1) Discloses in 1 place the complete effects of 1 trans.
(2) Provides chronological rec of all trans.
(3) Helps to prevent/locate errors because Dr. and Cr. can be easily compared.

35
Q
  1. (a) When entering transaction in journal,
    should Dr. or Cr. be written 1st?
    (b) Which should be indented Dr. or Cr.
A

(a) Dr.

(b) Cr.

36
Q
  1. Describe compound entry and provide 1 ex.
A

When 3+ acc are required in 1 journal entry => compound entry. Ex of compound entry is purchase of equip, part of which is paid for with cash and remainder is on account.

37
Q
  1. Should biz trans Dr. and Cr. be rec directly in ledger acc?
A

NO

38
Q
  1. Acc number is entered as last step in posting amounts from journal to ledger. What adv of this step?
A

To indicate item has been posted.

39
Q
  1. Journalize trans.
    (a) Mark invests $9,000 cash in biz in exchange for shares of CS.
    (b) Insurance of $800 is paid for the year.
    (c) Supplies of $2,000 are purchased on account.
    (d) Cash of $7,800 is received for services performed.
A

(a) Dr. Cash and Cr. CS
(b) Dr. Prepaid insurance and Cr. Cash
(c) Dr. Supplies and Cr. Acc payable
(d) Dr. Cash and Cr. Rev

40
Q
  1. (a) What is ledger?

(b) What is chart of accs and why it important?

A

(a) Entire group of acc maintained by comp including all asset, liability and SE acc is referred to collectively as ledger.
(b) Chart of acc is list of acc and acc numbers that identify location in ledger. It is important particularly for comp having large number of acc bec it helps org acc and define level of detail comp desires in its acc sys.

41
Q
  1. What is trial balance and what are its purposes?
A

Trial balance is list of acc and their bal at a given time. Primary purpose of trial bal is to prove (check) Dr.=Cr. after posting. Trial bal facilitates discovery of errors in journalizing and posting. In addition, it is useful in preparing fin statemt.

42
Q
  1. Juan is confused about how acc info flows through acc sys. He believes flow of info is as follows:
    (a) Dr. and Cr. posted to ledger.
    (b) Biz trans occurs.
    (c) Info entered in journal.
    (d) Fin statemt are prepared.
    (e) Trial bal is prepared.
    Is Juan correct? If not, indicate proper flow of info
A 
No, Jim is not correct. 
The proper sequence is:
(b) Business transaction occurs.
(c) Information entered in the journal.
(a) Debits and credits posted to the ledger.
(e) Trial balance is prepared.
(d) Financial statements are prepared
43
Q
  1. What errors would prevent the trial bal from bal?
    (a) Bookkeeper Dr. Cash for $600 and Cr. Exp for $600.
    (b) Cash collected on account Dr. to Cash for
    $900 and Cr. to Rev $90.
A
  1. (a) Trial balance would balance.

(b) The trial balance would not balance.

44
Q
  1. What are normal bal for Apple’s Cash, Acc Payable, and Interest Exp acc?
A

The normal balances are Cash debit, Accounts Payable credit and Interest Expense debit.

FINANCIAL ACCOUNTING (5 decks)

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