Quiz 3

Question 1

Double entry accounting

Answer 1

• Every transaction affects (at least) 2 accounts
• Every transaction has (at least) one debit and one credit
• debits must = credits

Question 2

Account

Answer 2

the basic record summarizing all transactions affecting a particular item of financial activity
- 3 parts: title of account, left or “debit” side, right or “credit” side

Question 3

T account

Answer 3

summary of debits and credits for a particular account for a period of time
used to record increases and decreases in each account

Question 4

DEA-LER Accounting

Answer 4

Some accounts have “debit balances” and some accounts have “credit balances”
DEA: ↑ Debit, ↓ Credit
LER: ↓ Debit, ↑ Credit

Question 5

Revenue _____ SE

Answer 5

increases

Revenue accounts show increases on the right (credit) side

Question 6

Expenses ____ SE

Answer 6

decrease

All expense accounts show increases on their left (debit) side

Question 7

Dividends paid to the owners ____ SE

Answer 7

decrease

The account shows an increase on the left (debit) side

Question 8

Journal entry

Answer 8

Used to document the economic event that occurred

Every journal entry is related to ONE transaction

Question 9

To record journal entries, we need to:

Answer 9

1. Identify (at least) 2 accounts involved
2. Decide whether the accounts are getting bigger or smaller (which account to debit and which to credit)
3. Record the date
4. Include a short description

Question 10

General Ledger

Answer 10

contains activity for all accounts for a period of time

Question 11

Trial Balance

Answer 11

lists all accounts and their balances at a given time