Study Guide 1

Question 1

anything of value that is owned

Answer 1

asset

Question 2

an amount owed by a business

Answer 2

liability

Question 3

financial rights to the assets of a business

Answer 3

equities

Question 4

the amount remaining after the value of all liabilities is subtracted from the value of all assets

Answer 4

owners’ equity

Question 5

the owner’s equity in a corporation

Answer 5

stockholders’ equity

Question 6

an equation showing the relationship among assets, liabilities, and owners’ equity

Answer 6

accounting equation

Question 7

business papers from which information is obtained for a journal entry

Answer 7

source documents

Question 8

the recording of debit and credit parts of a transaction

Answer 8

double-entry accounting

Question 9

a form for recording transactions in chronological order

Answer 9

journal

Question 10

a journal used to record only one kind of transaction

Answer 10

special journal

Question 11

a record summarizing all the information pertaining to a single item in the accounting equation

Answer 11

account

Question 12

a group of accounts

Answer 12

ledger

Question 13

a ledger that contains all accounts needed to prepare financial statements

Answer 13

general ledger

Question 14

a ledger that is summarized in a single general ledger account

Answer 14

subsidiary ledger

Question 15

an account in a general ledger that summarizes all accounts in a subsidiary ledger

Answer 15

controlling account

Question 16

the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

Answer 16

file maintenance

Question 17

an accounting system showing accounting information for two or more departments

Answer 17

departmental accounting system

Question 18

a business that purchases and sells goods

Answer 18

merchandising business

Question 19

transferring transaction information from a journal entry to a ledger account

Answer 19

posting

Question 20

a form prepared by the consumer showing the price deduction for purchase returns and allowances

Answer 20

debit memorandum

Question 21

an account that reduces a related account on a financial statement

Answer 21

contra account

Question 22

a deduction that a vendor allows on the invoice amount to encourage prompt payment

Answer 22

cash discount

Question 23

a cash discount on purchases taken by a customer

Answer 23

purchases discount

Question 24

an amount of cash kept on hand and used for making small payments

Answer 24

petty cash