Chapter 2 Accounting

35 terms by shayray68

Create a new folder

Advertisement Upgrade to remove ads

McGraw-Hill Chapter 2

A trial balance that balances is not proof of complete accuracy in recording transactions.

True

A collection of all accounts (with account balances) used by a business is called a:

General Ledger

When a company provides services for which cash will not be received until some future date, the company should record unearned revenue for the amount charged to the customer.

False

A credit entry:

Decreases asset and expense accounts and increases liability, common stock, and revenue accounts.

Which of the following is the appropriate journal entry if a company performs a service and then bills the customer?

Debit to Accounts Receivable, credit to Service Revenue.

Common Stock normally has a debit balance.

False

Source documents:

Are the origins of accounting information.

A journal gives a complete record of each transaction in one place and shows the debits and credits for each transaction.

True

A written promise to pay a definite sum of money on a specific future date is a(n):

Note Payable

Which of the following is a true statement regarding debits and credits?

Assets and expenses are both increased with a debit

As prepaid expenses are used up, the costs of these assets become expenses.

True

An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

True

A transaction that decreases an asset account and increases a liability account must also affect one or more other accounts.

True

Transactions are first recorded in the ledger.

False

What would be the account balance in the Service Revenue account after the following transactions, assuming a zero beginning balance?
Left a bill...4200
Collected Immediately...3500
Billed customer...2200
Preformed services on Acct...6000
Received Partial Payment on Acct...1500

$15,900
$4,200 + $3,500 + $2,200 + $6,000 = $15,900

The purchase of supplies on credit should be recorded with a debit to Supplies and a credit to Accounts Payable.

True

Source documents include all of the following except:

Ledgers

Generally, the ordering of accounts in a trial balance typically follows their identification number from the chart of accounts: assets, liabilities, equity, revenues, and expenses.

True

If a company provides services to a customer on credit, the service provider company should credit Accounts Receivable.

False

Land and buildings are generally recorded in the same ledger account.

False

Which of the following items would appear on the balance sheet?

Common stock, cash, supplies, prepaid rent, retained earnings, accounts payable, accounts receivable, office equipment, unearned revenue, and shaving equipment.

A revenue account normally has a debit balance.

False

An asset created by prepayment of an expense is:

Recorded as a debit to a prepaid expense account.

Accountants at Amalgamated Corporation incorrectly journalized a $50,000 equipment purchase as a debit to Buildings. This error was not discovered before the journal entry was posted. What is the correcting entry?

Debit Equipment and credit Buildings for $50,000 each.

If a company pays cash to purchase land, the journal entry to record this transaction will include a debit to Cash.

False

An account balance is:

The difference between the total debits and total credits for an account including the beginning balance.

Of the following accounts, the one that normally has a credit balance is:

Sales Salaries Payable

A debit is used to record:

A decrease in the balance of retained earnings.

Double-entry accounting is an accounting system:

That records the effects of transactions and other events in at least two accounts with equal debits and credits.

Wisconsin Rentals purchased office supplies on credit. The journal entry made by Wisconsin Rentals to record this transaction will include a:

Credit to Accounts Payable.

A liability created by the receipt of cash from customers in payment for products or services that have not yet been delivered to the customers is:

Recorded as a credit to an unearned revenue account.

Given the trial balance amounts below, compute net income.
Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640

$19,578
$20,000 - $422 = $19,578

What is the total debits on trial bal?
Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640

$199,152
$116,640 + $1,500 + $3,200 + $22,450 + $23,300 + $422 + $31,640 = $199,152

What would be the appropriate entry for the following transaction?
Bill Co. performed $5,200 in consulting services on account.

Debit to Accounts Receivable, credit to Service Revenue.

What would be included on income statement?
Common stock=120,000 cash=116,000 supplies=1,500 rent=3,200 revenue=20,000 Beginning Retained Earnings=30,000 Accts Payable=25,000 Accts Recievable=22,450 Office Equip=23,300 Unearned Rev=4,152 Utilities=422 Shaving=31,640

Service revenue and utilities expense.

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set