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19 Cards in this Set
- Front
- Back
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Before recording a business transaction, the accountant must determine three things:
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a. When the transaction should be recorded (recognition)
b. What value, or dollar amount, to place on the transaction (valuation) c. How the components of the transaction should be categorized (classification) |
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requires that one or more accounts be debited and one or more accounts be credited for each transition and that total dollar amounts of debits equal total dollar amounts of credits.
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Double-entry system
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Three parts to T-Account
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a. Title that expresses name of asset, liability, or stockholder's equity account
b. left side = debit c. right side = credit |
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work-paper listing of the accounts (typically in their order of appearance in the financial statements) with their end of period balances (debit or credit)
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Trial Balance
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Deciding whether to record a sale when the order for services is received or when the services are performed is an example of:
a. recognition issue b. valuation issue c. classification issue d. communication issue |
a. recognition issue
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Which of the following statements is true?
a. The chart of accounts usually is presented in alphabetical order b. The general ledger contains all the accounts found in the chart of accounts. c. The general journal contains a list of the chart of accounts d. Companies generally use the same chart of accounts. |
b. The general ledger contains all the accounts found in the chart of accounts.
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Which of the following is a liability account?
a. Accounts Receivable b. Dividends c. Rent Expense d. Unearned Design Revenue |
d. Unearned Design Revenue
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Although debits increase assets, they also:
a. decrease assets b. increase stockholder's equity c. increase expenses increase liabilities |
c. increase expenses
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Payment for a two-year insurance policy is recorded as a debit to
a. Prepaid Insurance b. Insurance Expense c. Cash d. Accounts Payable |
a. Prepaid Insurance
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An agreement to spend $250 a month on advertising beginning next month requires
a. a debit to Advertising Expense b. a debit to Prepaid Advertising c. no entry d. a credit to Cash |
c. no entry
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Transactions initially are recorded in the
a. trial balance b. T account c. journal d. ledger |
c. journal
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To test the total of debits and the total of credits are equal, the accountant periodically prepares a
a. trial balance b. T account c. general journal d. ledger |
a. trial balance
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When a liability is paid, which of the following is true?
a. Total assets and total liabilities remain the same b. Total assets and total stockholder's equity decrease c. Total assets decrease by the same amount that total liabilities increase d. Total assets and total liabilities decrease |
d. total assets and total liabilities decrease
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Which of the following is not true about a proper journal entry?
a. All credits are indented b. All debits are listed before the first credit c. An explanation is needed for each debit and each credit d. A debit is never indented, even if a liability or stockholder's equity account is involved |
c. An explanation is needed for each debit and each credit
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When cash is received in payment of an account receivable, which of the following is true?
a. Total assets increase b. Total assets stay the same c. Total assets decrease d. Total assets and total stockholder's equity increase |
b. Total Assets remain the same
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Which of the following is increased by debits?
a. Dividends b. Unearned Revenue c. Wages Payable d. Retained Earnings |
a. Dividends
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Which of the following is an asset?
a. Unearned Revenue b. Prepaid Rent c. Retained Earnings d. Service Revenue |
b. Prepaid Rent
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Which of the following accounts is a liability?
a. Interest Payable b. Interest Expense c. Interest Receivable d. Interest Income |
a. Interest Payable
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Which of the following accounts has a normal credit balance?
a. Prepaid Insurance b. Dividends c. Fees Earned d. Advertising Expense |
c. Fees Earned
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