The Recording Process

Question 1

define an account

Answer 1

an individual accounting record of increases and decreases in a specific asset, liability, or owner’s equity item

Question 2

what are the major activities in accounting?

Answer 2

identifying. recording, communicating

Question 3

define identifying

Answer 3

listing down financial transactions

Question 4

define the sub-activity of recording

Answer 4

classifying, summarizing, journalizing, posting

Question 5

what are the parts of an account?

Answer 5

title
debit side
credit side

Question 6

ledger is also known as

Answer 6

T- account

Question 7

define debit balance

Answer 7

debit amount exceeds credit amount

Question 8

double entry system

Answer 8

equality of debits and credits

Question 9

assets

Answer 9

debit increase in assets
credit decrease in assets

debit balance

Question 10

liabilities

Answer 10

debit decrease in liabilities
credit increase in liabilities

credit balance

Question 11

owner’s capital

Answer 11

debit decrease
credit increase

credit balance

Question 12

owner’s drawings

Answer 12

debit increase
credit decrease

debit balance

Question 13

revenues

Answer 13

debit decrease
credit increase

credit balance

Question 14

expenses

Answer 14

debit increase
credit decrease

debit balance

Question 15

enumerate the recording process

Answer 15

ANALYZE each transaction
ENTER the transaction info in the journal
TRANSFER the journal info to the ledger accounts

Question 16

what is a journal

Answer 16

book of original entry

shows the debit and credit effects on a specific account

Question 17

define journalizing

Answer 17

entering transaction data in the journal

Question 18

parts of a general journal

Answer 18

1. date
2. account titles and explanation
   
   • debit account title
     - credit account tile
     - brief explanation of the transaction
3. reference
4. dr and cr column

Question 19

define compound entry

Answer 19

an entry that requires three or more account

Question 20

define a ledger

Answer 20

• entire group of accounts maintained by a company

- provides the balance in each of the accounts

Question 21

define a general ledger

Answer 21

contains ALL ASSET, LIABILITY, and OWNER’S EQUITY ACCOUNT

Question 22

define posting

Answer 22

the procedure of transferring journal entries to the ledger account

JOURNAL TO LEDGER

Question 23

posting should be

Answer 23

• performed in chronological order

- all debits and credits of one journal entry must be posted

Question 24

define chart of accounts

Answer 24

lists the accounts and account numbers that identify their location in the ledger

Question 25

enumerate the recording steps:

Answer 25

1. analyze what type of account is involved

2. determine whether to make a credit or debit

Question 26

transaction 1

jam invests 10k in advertising company J

Answer 26

debit increase assets

credit increase owner’s equity (capital)

Question 27

transaction 2

5k equipment note payable

Answer 27

debit increase assets (equipment)

credit increase liabilities (notes payable)

Question 28

transaction 3

1200 cash advance from a client

Answer 28

debit increase assets (cash)

credit increase liabilities (unearned service revenue)

Question 29

transaction 4

900 rent payment

Answer 29

debit increase expenses (rent expense)

credit decrease assets (cash)

Question 30

transaction 5

600 for a one year insurance

Answer 30

debit increase assets (prepaid insurance)

credit decrease assets (cash)

Question 31

transaction 6

advertising materials on account for 2500

Answer 31

debit increase expenses

credit increase liabilities

Question 32

transaction 7

500 cash withdrawal by owner

Answer 32

debit increase owner’s drawings

credit decrease assets

Question 33

transaction 8

employee salary paid 4000

Answer 33

debit increase expenses (wages expense)

credit decrease assets (cash)

Question 34

transaction 9

receives 10k in cash for advertising services performed

Answer 34

debit increase in assets (cash)

credit increase in revenue (oe)

Question 35

define a trial balance

Answer 35

list of accounts and their balances at a given time

proves the mathematical equality of debits and credits AFTER posting

uncovers errors in journalizing and posting

useful in the preparation of financial statements

Question 36

steps in preparing a trial balance

Answer 36

1. list the account titles and their balances in the appropriate dr cr colum
2. total the dr and cr column
3. verify the equality