Chapter 2 smart book PDF

Preview

Summary

Download Chapter 2 smart book PDF

Description

chapter 2 – smart book. 1. The type of system that integrates the information of departments and functions of a company into a single computer system is called a(n) Multiple choice question. Electronic Data Processing system. Enterprise Resource Planning (ERP) system. Accounting Data system.

2. Economic events cause changes in the: Multiple choice question. cash position of a company operating activities of a company financial position of a company operating results of a company 3. An internal event involves an exchange between the company and a separate economic entity. True false question. True False 4. Which of the following is an internal economic event? Multiple choice question. Issuing stock Borrowing from a bank Depreciating equipment Collecting on accounts receivable 5. Which of the following represents the accounting equation? Multiple choice question. Assets = Liabilities - Owners' Equity Assets = Liabilities + Owners' Equity Owners' Equity - Liabilities = Assets Assets + Liabilities = Owners' Equity 6. The objective of an Enterprise Resource Planning (ERP) system is to create a customized software program that integrates the information of departments and functions of a company into a single computer system. True false question. True False

7. Which of the following make up shareholders' equity? (Select all that apply.) Multiple select question. amounts invested by shareholders assets owned by shareholders assets purchased by the corporation liabilities owed by the corporation amounts earned by the corporation 8. Which of the following are economic events? (Select all that apply.) Multiple select question. The payment of employee salaries for the week. Borrowing $10,000 from the bank. A proposal to purchase $1,000 of inventory from supplier. 9. Which of the following are external events? (Select all that apply.) Multiple select question. Using supplies purchased in the previous month. Borrowing from the bank. Paying employee salaries. Collecting on a customer account. 10. Which of the following is an internal event? Multiple choice question. payment of rent expense use of supplies payment of salaries repayment of a note payable 11. The left side of the accounting equation represents _____, while the right side represents _____. Multiple choice question. the total economic resources of the company; the total claims against the company the total liabilities of the company; the total assets of the company the total claims against the company; the total economic resources of the company the total assets of the company; the total invested in the company

12. Retained earnings equals net income plus distributions to shareholders. false 13. Which of the following is an external event? Multiple choice question. borrowing from the bank

depreciating equipment using supplies

Correct Answer borrowing from the bank

14. An internal event (Select all that apply) Multiple select question. does not involve an exchange transaction with another entity. does not affect the company's financial position. affects the company's financial position. involves an exchange transaction with another entity. 15. The accounting equation is: Assets = _______ + Owners' Equity. Blank 1: Liabilities or liability

16. An event that has a dual effect on the accounting equation is referred to as a(n) Multiple choice question.

investment. transaction. indirect effect. direct effect. 17. Which of the following make up shareholders' equity of a corporation? (Select all that apply.) Multiple select question.

current assets long-term liabilities property and equipment retained earnings paid-in capital 18. A(n)________ event is any event that directly affects the financial position of the company. (Enter one word per blank) Economic 19. Each economic event, or transaction, affecting the accounting equation has a(n)_______ effect because resources must always equal claims. Blank 1: dual or double

20. Galaxy Corporation issues 500 shares of $1 par value common stock for $5,000. What is the total effect on owners' equity?

Multiple choice question.

Increases $4,500 Increases $500 Increases $5,000 No effect 21. Jarvis Company signs a note payable for $10,000 and receives the funds. This transaction will increase the________ account and increase the note payable account. Blank 1: cash

22. Conner Corporation purchases supplies on account. This transaction will ______ assets and ______ liabilities. Multiple choice question.

increase; increase decrease; decrease increase; decrease decrease; increase 22. A transaction is an event that Multiple choice question.

increases or decreases total assets has a single effect on the accounting equation has a dual effect on the accounting equation increases or decreases income 23. Ace Cleaning Services performs cleaning services for $2,000 cash. What are the effects on the balance sheet equation for Ace Cleaning Services? (Select all that apply.) Multiple select question.

decrease accounts receivable increase cash increase owners' equity increase accounts receivable decrease owners' equity decrease cash 24. An individual invests $10,000 to open a new business. What is the effect on assets? Multiple choice question.

Decrease in total assets Increase in total assets No effect on assets 25. Pluto Corporation borrows $20,000 from the bank. What are the balance sheet effects of this transaction? (Select all that apply.) Multiple select question.

increase liabilities increase assets decrease owners' equity

26. Bigelow Company purchases supplies on account. What are the effects on the balance sheet equation? (Select all that apply.) Multiple select question.

increase owners' equity decrease assets increase assets decrease owners' equity decrease liabilities increase liabilities 27. Hargrave Professional Group performs legal services on account. What is

the effect of this transaction on the balance sheet equation for Hargrave? Multiple choice question.

Increase assets Decrease liabilities Decrease owners' equity 28. Purchasing supplies on account _________ the supplies account and ________ accounts payable. Multiple choice question.

decreases; decreases decreases; increases increases; increases increases; decreases 29. Salaries paid to employees________ owners' equity for the expense

incurred. (Enter only one word.) Blank 1: decrease, debit, reduce, decreases, or lower 30. The use of office supplies purchased on account in the previous month will have what effects on the balance sheet equation? (Select all that apply.) Multiple select question.

decrease retained earnings increase assets decrease liabilities decrease assets

31. An individual invests $10,000 to open a new business. What is the effect on assets? Multiple choice question.

No effect on assets Decrease in total assets Increase in total assets 32. Royce Corporation pays for supplies purchased in the previous month. What is the effect on the accounting equation for the payment of the supplies? (Select all that apply.) Multiple select question.

Decrease assets Decrease owners' equity Increase assets Increase owners' equity Decrease liabilities Increase liabilities 33. The accounting system that refers to the effect that each transaction has on the accounting system is called a(n) Multiple choice question.

enterprise resource planning system database accounting system double-entry system 34. An account is maintained for each financial statement element, whereas a(n) ______ ____-______ contains all of the accounts of the entity. Blank 1: general Blank 2: ledger

35. Londa Corporation pays employees $3,000 for the month. What is the effect on the balance sheet equation? (Select all that apply.) Multiple select question.

increase owners' equity increase assets decrease assets increase liabilities decrease owners' equity decrease liabilities 36. The effect on the accounting equation from using supplies which had been previously recorded as an asset is: Multiple choice question.

assets increase and owners' equity decrease assets decrease and liabilities increase assets decrease and owners' equity decrease

assets increase and liabilities increase

37. The payment of an account for supplies purchased in the previous month will ______ the cash account. Multiple choice question.

Increase have no effect on decrease 38. The double entry system of accounting means each transaction Multiple choice question.

effects only a single account has a dual effect on the accounting equation cannot effect more than one account 39. Elements of the accounting equation are represented by ________ which are contained in the general ledger. Blank 1: accounts

40. An account should have an account title, account number, a place for the date of the transaction, and two columns for Multiple choice question.

revenues and expenses. closing and post-closing. assets and liabilities. increases and decreases. 41. A company debits cash to increase its cash account. A bank _____ the customer's checking account because the customer account represents a liability on the bank's balance sheet. Blank 1: credits or credit

42. In a double-entry accounting system, each transaction has a _______effect on the accounting equation. (Enter only one word.) Blank 1: dual or double 43.

In a double-entry accounting system, the _____represents the left side of the account

Blank 1: debit or debits

44. Zircon Corporation has 100 clients and maintains a separate account receivable account for each client. The account receivable account in the general ledger that contains the total accounts receivable amount owed to Zircon by all customers is referred to as a Multiple choice question.

general journal account. subsidiary account. control account. temporary account.

44. An account that is used for instructional purposes instead of drawing a formal general ledger account is referred to as a(n) ______. Multiple choice question.

general account T-account bank account dual account 45. In banking, a customer account is credited when cash is deposited because the customer account represents a liability to the bank. True 46. Which accounts require a credit to increase the account? (Select all that apply.) Multiple select question.

inventory common stock equipment revenue 47. JBM Accounting provides services to clients on account for $5,000. What is the indirect effect on the balance sheet? Multiple choice question.

Retained earnings increase. Liabilities increase. Assets decrease. 48. Which of the following represents the right side of an account?

Multiple choice question.

debit decrease credit increase 49. An asset _____ by debit entries, and _________ by credit entries. Blank 1: increases or increase Blank 2: decreases or decrease

50.Indirectly, expenses will _____ retained earnings and revenues will _____ retained earnings. Multiple choice question.

decrease; increase equal; equal increase; decrease 51. Which of the following are permanent accounts? (Select all that apply.) Multiple select question.

cost of goods sold common stock cash revenue equipment 52. A(n) ______ represents the left side of the account, whereas a(n) ______ represents the right side of the account. Multiple choice question.

decrease; increase credit; debit increase; decrease debit; credit 53. Which accounts are closed to retained earnings at the end of an accounting period? Multiple choice question.

Temporary Both temporary and permanent Permanent 54. The accounts receivable control account is found in the ______ ledger, whereas individual customer accounts are located in the ______ ledger. Multiple choice question.

temporary; permanent subsidiary; general general; subsidiary

permanent; temporary

55. To increase a liability, one should _______ the liability account and to increase an asset, one should _____ the asset account. Multiple choice question.

debit; debit credit; credit credit; debit debit; credit 56. A ______ account represents the basic financial position elements of the accounting equation and a _____ account keeps track of the changes in the retained earnings component of shareholders' equity. Multiple choice question. subsidiary; control permanent; temporary temporary; permanent 57 In a double entry accounting system, the right side of the account is represented by a(n) Blank 1: credit

58. Permanent accounts are closed at the end of the accounting period. True false question. True False

59. The general ledger accounts serve as ________ accounts. Multiple choice question.

control subsidiary temporary permanent 60. Which of the following are temporary accounts? (Select all that apply.) Multiple select question.

accounts payable salary expense revenue retained earnings 61. Temporary accounts are periodically closed, and the net effect is recorded in the permanent_______. _______ account.

62. 1. 2. 3. 4. 5.

Prepare an unadjusted trial balance Record adjusting entries Prepare an adjusted trial balance Prepare financial statements Close the temporary accounts

63. The primary purpose of a source document is to assist in Multiple choice question.

preparing a trial balance. adjusting the accounts. preparing financial statements. analyzing a transaction. 64. Transaction analysis involves which of the following? (Select all that apply.) Multiple select question.

Closing the temporary accounts. Identifying the accounts to be debited and credited. Identifying the elements involved in the transaction. Posting the entry to the general ledger. 65. Repetitive transactions such as sales or purchases are usually recorded in a(n) ______ rather than the general journal. Multiple choice question.

chart of accounts special journal ledger journal subsidiary ledger 66. Which of the following steps occurs only at the end of the year? Multiple choice question.

Record adjusting entries and post to the general ledger accounts Obtain information about external transactions from source documents Close the temporary accounts to retained earnings Prepare the financial statements 67. Sales invoices, bills from suppliers, and cash register tapes that relay information to the accountant are referred to as ________ documents. Blank 1: source

68. Transaction analysis includes _________ the source documents to determine the dual effect on the accounting equation. Multiple choice question.

summarizing identifying

recording analyzing

69. Beck Company borrowed $50,000 from the bank and signed a note. The journal entry Beck makes to record this transaction includes (Select all that apply.) Multiple select question.

debit to notes payable $50,000 credit to notes payable $50,000 credit to cash for $50,000 debit to cash for $50,000 70. When rent is paid in advance, it is properly recorded on the balance sheet as Multiple choice question.

a contra asset. a liability. an asset. retained earnings. 71.

69. A general journal entry should contain which of the following? (Select all that apply.) Multiple select question.

Whether the account is temporary or permanent. The date. Supporting explanations. The accounts and amounts debited and credited. 70. A chronological record of all economic events affecting a firm are recorded in a(n) _________ Blank 1: journal

1.Analyze the transaction 2. Record the transaction 3.Post from the journal the the general ledger 4. Prepare the unadjusted trial balance. 71. The primary purpose of a source document is to assist in Multiple choice question.

adjusting the accounts. preparing a trial balance. preparing financial statements. analyzing a transaction. 72. The process of reviewing the source documents to determine the dual effect on the accounting equation and the specific elements involved is called Blank 1: transaction, analyze, analyzing, or transactions Blank 2: analysis, transactions, or transaction

73. In a journal entry, the amount to be _____ is entered in the first column, and the amount to be _____ is entered in the second column. Multiple choice question.

debited; credited credited; debited added; subtracted subtracted; added 74. In step 3 of the accounting processing cycle: Multiple choice question.

the transaction is recorded in the general ledger information is obtained from source documents the transaction is recorded in a journal the transaction is analyzed 75. Which of the following serves to relay important information about a transaction to the accountant? (Select all that apply.) Multiple select question.

cash register tapes quarterly tax return bills from suppliers sales invoices annual report 76. The process of transferring debit and credit information from the journal to the ledger is called: Multiple choice question.

identifying posting recording analyzing 77. A chronological record of all economic events affecting a firm are recorded in a(n) Blank 1: journal

78. To record the issuance of common stock at par value, (Select all that apply.) Multiple select question.

credit cash debit cash credit common stock debit common stock 79. The process of transferring information from a journal entry to the specific accounts affected in the general ledger is referred to as Blank 1: posting or post

80. Repetitive transactions such as sales or purchases are usually recorded in a(n) ______ rather than the general journal. Multiple choice question.

subsidiary ledger special journal chart of accounts ledger journal 81. The journal entry to record the issuance of 100 shares of $5 par value common stock for $500 would include which of the following? Multiple choice question.

Credit retained earnings $500. Credit additional paid-in capital $500. Debit common stock $500. Debit cash $500. 82. Carly Enterprises borrows $3,000 on a 9-month 8% note from Second National Bank. The journal entry to record the note is Multiple choice question.

debit cash $3,000; credit note receivable $3,000. debit cash $3,000; credit note payable $3,000. debit account receivable $3,000; credit note payable $3,000. debit note payable $3,000; credit note receivable $3,000.

83. Focus Corp. pays $12,000 for 2 years of rent. What is the journal entry to record this transaction? Multiple choice question.

Debit prepaid rent $12,000; credit cash $12,000. Debit cash $12,000; credit rent payable $12,000. Debit cash $12,000; credit prepaid rent $12,000. Debit prepaid rent $6,000; credit cash $12,000; credit rent payable $6,000. 84. The process of transferring debit and credit information from the journal to the ledger is called: Multiple choice question.

posting analyzing identifying recording 85. When a company pays rent in advance, prepaid rent is ________ and cash

is ________. Multiple choice question.

credited, credited debited, credited credited, debited debited, debited 86. The process of transferring information from the journal to the ledger is referred to as Multiple choice question.

preparing journal entries. preparing closing entries. adjusting. posting. 87. Kendall Corp. purchased equipment for $100,000 by paying $20,000 in cash and signing a note payable for $80,000. The journal entry to record this transaction would include a Multiple choice question.

debit to cash $20,000. debit to equipment $80,000. debit to note payable $80,000. debit to equipment $100,000. 88. Tindall Corp. purchased inventory for $50,000 ...