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ACCT 2030 chapter 2

Terms in this set (62)

something a company owns that has economic value
asset
an amount owed by the company that will require the use of assets in the future
liability
the residual interest in a corporation after all liabilities are are provided for
stockholders equity
the financial statement that shows the balances of a companys' asset, liability, and stockholders' equity accounts (at a paticular point in time)
balance sheet
all of the financial records supporting a companys' financial statements
the books
the means of recording a particular, individual transaction in the books.
journal entry
a record reflecting all the activity affecting a particular item
account
a common method of graphically illistrating activity in an account
t account
a list of all the accountxs in a company's books, with their balance
trial balance
analyze, record, summarize, prepare trial balance, report
account cycle
what is the exchange?
...
Which of these line items appear on a balance sheet?
-Liabilities
-Assets
-Stockholders' Equity
Which groups have claims to a business's assets?
-creditors
-stockholders
Which transactions are recorded in the accounting system?
both internal and external
All transactions ______.
affect assets, liabilities, and/or stockholders' equity
have at least two effects on the accounting equation
True or false: When a company issues common stock, it gives cash to its owners in exchange for stock.
false
Acme Enterprises issued $20,000 of stock in exchange for cash. The journal entry to record this transaction will include a ______ of $20,000. (
credit to Common Stock
debit to Cash
Who has first claim to a business's assets should the company go out of business?
creditors
Events that do not involve exchanges between the company and someone else but affect assets, liabilities and/or stockholders' equity are called
internal events
Company X issued $10,000 of common stock to its owners for cash. It recorded the transaction by increasing assets and increasing liabilities. Which of the following statements are correct? (Check all that apply.)
Stockholders' equity will be too low.
Liabilities will be too high.
Which of the following are possible effects on the accounting equation when recording a transaction that increases a liability by $100? (Select all that apply.)
An asset increases by $100
A stockholders' equity account decreases by $100
A company typically receives , an asset, when it issues stock to its owners.
cash
The beginning balance in Acme's Cash account was $100,000. During the month, Acme issued $25,000 of common stock for cash. The balance in Acme's Cash account is now a ______.
debit of $125,000
Which groups have claims to a business's assets? (Check all that apply.)
stockholders
creditors
Lox, Stock and Bagel, Inc., issued $100,000 of common stock. It recorded the transaction by increasing Cash and decreasing Common Stock. As a result of this entry, ______.
the accounting equation will be out of balance
All transactions ______. (Select all that apply.)
have at least two effects on the accounting equation
affect assets, liabilities, and/or stockholders' equity
What is the effect on total assets when a company purchases a cash register for a cash payment of $1,200?
no effect
True or false: When a company issues common stock, it gives cash to its owners in exchange for stock.
false
True or false: A transaction can cause one asset to increase and different asset to decrease and still have the accounting equation balance.
true
The issuance of common stock is recorded with a debit to ______ and a credit to ______
Cash; Common Stock
The creditors' claim to a company's resources is represented by ______.
total liabillities
Identify the account title that may be used to record borrowing cash in exchange for a promissory note.
note payable
Company X receives $10,000 from issuing common stock to its owners. The effect on the accounting equation is a(n) _____. (Check all that apply.)
increase in stockholders' equity
increase in assets
When a company purchases an asset in exchange for a promise to pay later, the company records ______.
an increase in a liability account
Show the effect of recording the borrowing of $10,000 from a bank on the accounting equation. _____ by $10,000. (Select all that apply.)
Liabilities increase
Assets increase
Lox, Stock and Bagel, Inc., issued $100,000 of common stock. It recorded the transaction by increasing Cash and decreasing Common Stock. As a result of this entry, ______.
the accounting equation will be out of balance
True or false: If one asset increased, it must be the case that either liabilities or stockholders' equity increased by the same amount.
false
The beginning balance in Acme's Cash account was $100,000. During the month, Acme issued $25,000 of common stock for cash. The balance in Acme's Cash account is now a ______.
d 125
MMM Pizza bought $1,500 of equipment on account (i.e., on credit). What is the effect of recording this transaction on the company's total liabilities?
Total liabilities will increase.
Z Best, Inc. issued $1,000,000 of common stock for cash. By accident, Z Best recorded the transaction by increasing cash and decreasing stockholders' equity. As a result of this entry, ______. (Check all that apply.)
the accounting equation is out of balance
common stock is understated
stockholders' equity is understated
Financial information needed to manage a company is provided by a(n) ______ system.
accounting
All accounting systems ______. (Select all that apply.)
combine beginning balances with the activity during the accounting cycle to yield the ending balances for each account.
record and summarize financial effects of transactions
follow the accounting cycle
An increase in Retained Earnings would be recorded with a ______.
credit
Fill in the blank question.
The Equipment account is increased with an entry on the side of the Equipment T-account.
debit
Which of the following have normal credit balances? (Select all that apply.)
Notes Payable
Accounts Payable
Common Stock
The Mortgage Payable account is increased with an entry on the ----Blank 1Blank 1 debit , Incorrect Unavailable side of the T-account.
credit
A company issued 1,000 shares of stock for $100,000. The increase in the Common Stock account would be recorded with a ______.
credit
A company paid $500 cash for a new printer. The entry to record this transaction would include a ______ to Cash.
credit
When recording a transaction, the debits must always equal the ---.
credits
Liabilities have a normal balance.
credit
Accounts Payable is increased with an entry on the side of the T-account.
credit
A company's beginning Accounts Payable is $1,000. It had a $10,000 of purchases on account and paid $7,000 of the amounts owed. The Accounts Payable ending balance equals a _____ balance.
$4,000
Which of the following have normal credit balances?
Accounts Payable
Common Stock
Notes Payable
Journals are used to ______.
record transactions chronologically
A company's beginning Notes Payable is $100,000. It borrowed $50,000 by issuing a promissory note to the bank and repaid $60,000 of the amounts owed. The Notes Payable ending balance equals a _____ balance.
$90,000 credit
The beginning balance in Lucre's Cash account was $1,200. During the month, Lucre borrowed $5,000 cash from Last National Bank and paid a supplier $500. The balance in Lucre's Cash account is now a ______.
debit of $5,700
A company issued 1,000 shares of stock for $100,000. The increase in the Common Stock account would be recorded with a ______.
credit
The journal entry to record the payment of $30,000 cash for the creation of the company's logo includes ______.
a debit to Logo/Trademarks and a credit to Cash
The beginning balance in Acme's Accounts Payable was $4,000. Acme then bought $100 of supplies on account and paid $700 of the amount that it owed for supplies purchased on account last month. The ending balance in Acme's Accounts Payable was a credit of ______.
$3,400
A classified balance sheet shows subtotals for current --and current---
asset/liabilities
The formula for calculating the current ratio is ______
current assets divided by current liabilities
Which of the following are non-current assets that are found on the balance sheet? (
Machinery
Equipment
Buildings
Land
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