Chapter 2 quiz PDF

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Chapter 2 quiz...

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Chapter 2



Which of the following would be considered a source document in an accounting system? Checks Employee speeding ticket Sales receipt Purchase order Payroll records



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



The general ledger can be used to determine which of the following (select all answers which apply):

common and unique accounts used by a business. increases and decreases in all accounts in a business. which accounts are being used by a company and their balances at any given time.



True or false: Assets are claims (by creditors) against the company.



Which of the following accounts would be considered an asset? (Check all that apply.)

Supplies Building Cash Accounts receivable 

Which of the following is the best definition of a source document in the accounting process?

A source document identifies and describes transactions and is the basis for entering an event into the accounting system. 

Which of the following items would be considered "cash" and reflected in a company's Cash account? (Check all that apply.)

Checks Coin Money orders 

The correct definition of an "account" includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item 

Which of the following statements is (are) true about accounts receivables? (Check all that apply.)

Accounts receivable reflects the amount owed by customers. Accounts receivable are increased when credit sales are made. 

Which of the following describes a general ledger?

The general ledger is a record containing all accounts used by a company. 

Notes receivable is considered asset



Which of the following statements is the best definition of an asset?

Assets are resources owned or controlled by a company and that have expected future benefits.



An annual insurance policy is paid in advance by a company. How will the company treat this initial payment and the subsequent expiration of a portion of the policy over time? (Check all that apply.)

As a portion of the policy expires, the expired portion will be removed and transferred to an expense account. Over time, the expired portion of the policy must be removed from the asset account as it has been used up and is no longer considered an asset. The initial payment will be recorded as an increase to a Prepaid Insurance account.



Identify which of the following lists include only examples of assets.

Building, cash, accounts receivable



Which of the following lists of items contain only examples of prepaid (expense) accounts?

Prepaid rent, prepaid insurance



Cash can take many forms. From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders



When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).



Accounts receivable are increased by credit sales and are decreased by customer payments.



Which of the following statements are accurate regarding supplies? (Check all that apply.)

Unused supplies are treated as assets. Supplies are assets until they are used. Unused supplies can be recorded as Store Supplies, Office Supplies or Supplies.

When supplies are purchased, they are added to the Supplies account.  Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply.) Notes receivable is classified as an asset. It is the promise of another entity to pay a specific sum of money on a specified future date. Another name for a note receivable is a promissory note. 

Equipment is a(n) asset

Blank 1Blank

1 asset , Correct

Unavailable (asset/liability/expense) account. It is reported on the left

Blank 2Blank

2 left , Correct Unavailable (left/right) side of the

accounting equation and is increased

Blank 3Blank

3 increased , Correct

Unavailable(increased/decreased) when equipment is purchased.



Which of the following statements is correct about prepaid accounts

Prepaid accounts are also called prepaid expenses and are considered assets. 

The Building account is a(n) asset

Blank 1Blank

1 asset , Correct

Unavailable (asset/liability/expense) account and is reported on the left

Blank 2Blank

2 left , Correct Unavailable (left/right) side of the

accounting equation.



Which of the following are examples of prepaid (expense) accounts? (Check all that apply.)

Prepaid insurance Prepaid rent 

Which of the following statements is accurate about the Land account? (Check all that apply.)

The Land account is an asset. The Land account is increased on the left side of its T-account. The Land account is used to record the costs of land purchased by the business.



Which of the following are accurate statements regarding how to report or treat prepaid accounts? (Check all that apply.)

The unexpired portion of prepaid accounts are treated as assets. Over time, the expired portion of prepaid accounts is transferred from the asset account and reported as an expense. The expired portion of prepaid accounts is reported on the income statement as an expense. 

Which of the following statements is the correct definition of a liability?

A liability is a claim by a creditor against the assets of a business. 

Supplies are assets

Blank 1Blank

1 assets , Correct

Unavailable (assets/expenses/liabilities) until they are used. When they are used up, their costs are reported as expenses Blank 2Blank 2 expenses , Correct Unavailable (assets/expenses/liabilities).



Match the item on the left with the correct definition on the right



Which of the following statements is (are) accurate regarding equipment purchased within a business? (Check all that apply.)

Equipment is an asset. Equipment purchases are reported on the balance sheet.

Equipment cost is initially recorded as an asset and as it is used and gets worn down, the cost is gradually expensed. Equipment is reported on the left side of the accounting equation.



Accounts payable refer to obligations owed by

Blank 1Blank

1 by ,

Correct Unavailable (by/to) the business and are classified as a(n) liability Blank 2Blank 2 liability , Correct Unavailable (asset/liability/expense) account.



Which of the following statements is accurate regarding the Building account?

A Building asset account is used to record the costs of purchasing a store, office, warehouse or factory.



The Notes payable account is a(n) liability

Blank 1Blank

1 liability ,

Correct Unavailable (asset/liability/expense) account and is increased on the right

Blank 2Blank

2 right , Correct Unavailable (left/right) side of

the T-account.



True or false: The cost of land owned by a business is recorded in the Land account and this account is classified as an expense.



Which of the following statements is (are) correct regarding unearned revenues? (Check all that apply.)

Unearned revenues refer to a liability that is settled when a company delivers a product or performs a service. Unearned revenue is a liability account which is set up when a customer pays in advance for a product or service. 

Which of the following statements is (are) correct regarding the definition of a liability? (Check all that apply.)

A liability is a debt owed by the business. A liability can be settled by transferring assets or providing products or services to others. A liability is a claim by creditors against the assets of a business.



Accrued liabilities are amounts owed that are not yet paid



Which of the following statements is the correct definition of a creditor?

A creditor is an individual or organization that has a right to receive payments from a business.



Match the items on the left with their definition on the right.



Which of the following statements is accurate regarding Accounts payable?

Accounts payable refer to promises to pay later, which may arise from the purchase of supplies or services. 

Which of the following accounts impact equity? (Check all that apply.)

Dividends Common Stock Expenses Revenue



Which of the following statements is (are) correct regarding the Notes payable account? (Check all that apply.)

Notes payable is reported on the balance sheet. Notes payable is a liability account. Notes payable is a formal promise to pay a certain sum of money on a specified future date. 

Enter one word for each blank. The expanded accounting equation is: ASSETS Blank 1Blank 1 ASSETS , Correct Unavailable = LIABILITIES

Blank 2Blank

2 LIABILITIES , Correct

Unavailable + common stock + REVENUES Correct Unavailable - EXPENSES

Blank 3Blank

Blank 4Blank

3 REVENUES ,

4 EXPENSES , Correct

Unavailable - dividends. Do not include the word "account(s)" in your answers



When the product or service related to an unearned revenue is delivered, the earned portion of the unearned revenue is transferred to a _____ account.

revenue 

When the stockholders receive a dividend, how would this affect the equity of a business?

Assets are decreased and equity is decreased. 

All of the following are examples of accrued liabilities:

interest payable wages payable taxes payable 

Which of the following statements about the Dividends account is (are) correct? (Check all that apply.)

Dividends are increased on the left side of the T-account. Dividends is used to record distributions of assets to the owners of a business. Dividends decrease equity.



Which of the following statements is the correct definition of equity?

Equity is the owner's claim on a company's assets. 

From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales 

There are several types of accounts that impact equity. Which of the accounts below cause equity to increase?

Common stock and revenues



Which of the following statements about revenues is correct?

Revenues cause equity to increase, and they are increased on the right side of the accounting equation. 

Which of the following formulas is correct in depicting the expanded accounting equation? Assets = Liabilities + Common stock - Dividends + Revenues - Expenses



Which of the following accounts are examples of expenses? (Check all that apply.)

Rent expense Supplies expense 

The stockholders of a business received a $1000 dividend. How would this affect the total equity of the business?

Assets would be decreased and total equity would decrease as well.



Which of the following statements is correct regarding expenses.

Expenses are increased on the left side of their T-account because they decrease equity.



The Dividends account is used to record dividends dividends , Correct

Blank 1Blank

1

Unavailable (investments/dividends/expenses/revenues) by the owner and has a negative Blank 2Blank 2 negative , Correct Unavailable (positive/negative) impact on equity. 

Which of the following statements is the best definition of the Chart of Accounts?

It is a list of all ledger accounts which exist in a business and includes an identification number assigned to each account.



Revenues cause equity to increase

Blank 1Blank

1 increase , Correct

Unavailable (decrease/increase) and they are increased on the right

Blank 2Blank

2 right , Correct Unavailable (left/right) side of

the T-account.



Which statement best describes a T-account?

A T-account represents a ledger account and is a tool used to understand the effects of one or more transactions. 

From the following lists of accounts, choose the list(s) which contains only expense accounts.

Rent expense, wages expense, insurance expense 

Which of the following statements is (are) correct regarding the sides of a T-account? (Check all that apply.)

The left side is called the debit side. The right side is called the credit side. Liability accounts will be increased on the right side. Asset accounts will be increased on the left side. 

Since expenses are the costs of doing business and cause equity to decrease

Blank 1Blank

1 decrease , Correct

Unavailable (increase/decrease), expenses are increased on the left Blank 2Blank 2 left , Correct Unavailable (right/left) side of their T-account.



Which of the following statements is correct?

To debit an account means to enter transactions on the left side of a Taccount. 

Match the definition on the left with the term/item on the right.

Which of the following statements is (are) correct? (Check all that apply.) Crediting means to enter transactions on the right side of a T-account. Crediting a liability account will increase it. Crediting the Common Stock account means to increase it



From the lists of accounts below, which one contains only revenue accounts?

Interest revenue, Professional fees earned, Sales 

Which of the following statements is correct in regards to debiting and crediting an account?

A debit or a credit can increase an account, depending on what kind of account it is. 

Which of the following statements is (are) correct regarding a Taccount? (Check all that apply.)

A T-account will show the debit and credit effects of transactions. A T-account may be used as a tool to visualize the effects of a transaction. A T-account represents a ledger account.



The T-account for Accounts payable had 4 transactions entered into it. It was increased by $300 and by $100 and decreased by $50 and by $150, respectively. Its balance at the end of the period would be a (debit/credit) credit Blank 1Blank 1 credit , Correct Unavailable balance of $ 200



The account title is shown at the top of a T-account. The left side of a Taccount is called the debit Blank 1Blank 1 debit , Correct Unavailable side, and the right side is called the credit

Blank 2Blank

2

credit , Correct Unavailable side 

Which of the following accounts has a normal debit balance? (Check all that apply.)

Cash Supplies Buildings Accounts receivable 

To enter transactions on the left side of a T-account means you will debit

Blank 1Blank

1 debit , Correct Unavailable (debit/credit) the

account and will cause a(n) increase

Blank 2Blank

2 increase , Correct

Unavailable (decrease/increase) in an asset account. 

List the steps in processing transactions in the correct order.

St epII dent i f yt r ansact i onsandsour cedocument s. St epI IAnayl set r ansact i onsusi ngAccount i ngEquat i on St epI I IRecor dJour nal Ent r y St epI VPostent r yt ol edge



To enter transactions on the right side of a T-account means you will credit Blank 1Blank 1 credit , Correct Unavailable (debit/credit) the account and will cause a(n) increase

Blank 2Blank

2 increase , Correct

Unavailable(decrease/increase) in a liability account.



Transferring entries from the journal to the ledger is called (posting/preparing/journalizing)



Select the statements that are true regarding debiting and crediting. (Check all that apply.)

For an account where a debit is an increase, the credit is a decrease. A credit will always decrease an asset account. A debit or a credit can increase or decrease an account, depending on the account. A debit can increase an expense account. 

Which of the following statements is (are) correct regarding a journal? (Check all that apply.)

In a journal, both the debit and credit side of the transaction can be seen. Transactions are generally entered in chronological order. A journal is used to record business transactions. 

The T- account for Cash had 3 transactions entered into it. It was increased by $400 and decreased by $100 and by $30, respectively. Its balance at the end of the period would be a (debit/credit) debit 1Blank

Blank

1 debit , Correct Unavailable balance of $ 270



Which of the selections below includes all of the required information to be entered in a journal? Date of transaction, explanation of transaction, debited and credited accounts, dollar amounts of debits and credits



Which of the following accounts has a normal credit balance? (Check all that apply.)

Accounts payable Unearned consulting revenue Common stock



Select the statements below that are correct in regards to entering transactions in a journal. (Check all that apply.)

Total dollar amount of debits must equal the total dollar amount of credits. Credited accounts should be indented. Leave one blank line between each completed journal entry.



The steps in the accounting process include: (Check all that apply.)

Analyze transactions Identify transactions and source documents Record business transactions 

Which of the following statements best explains the posting reference in a journal and a ledger?

The posting reference creates a link between the journal and the ledger. 

Which of the following is correct regarding posting a transaction?

Posting means to transfer journal information to a ledger. 

Which of the following statements is (are) correct regarding the Balance column in a ledger (or Balance column account)? (Check all that apply.)

An abnormal balance is identified by writing it in red or setting it in brackets. A zero balance for an account is usually shown by writing zeros or a dash in the balance column. Immediately after posting a transaction, the balance of the account is written in the Balance column.
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