SO1Ch' 3 The Accounting Information System Analyze the effect of business transactions on the basic

1
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• If an asset is increased, what could be the other
  part of the transaction?

Answer Another asset decreases, liability
increases, or stockholders equity increases
2
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• Retained Earnings in stockholders equity is
  increased by ____.

Answer Revenues
3
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• If total liabilities increased by 1,000, then
  ____ must have increased by 1,000, or ____ must
  have decreased by 1,000.

Answer assets, stockholders equity
4
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• The payment of a liability decreases both ____
  and ____.

Answer Cash in Bank and Accounts Payable
5
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• Economic events that require recording in the
  financial statements are called _____.

Answer Transactions
6
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• Collection on an account receivable will increase
  ___ and decrease ____.

Answer Cash in Bank, Accounts Receivable
7
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• If total assets are increased, there would be a
  corresponding increase in ____ or _____.

Answer liabilities or stockholders equity.
8
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• Which items affect retained earnings?

Answer Revenue, Expenses, Dividends
9
SO1--Ch. 3 The Accounting Information
SystemAnalyze the effect of business
transactions on the basic accounting equation.

• What are the T accounts for these transactions?
• Services rendered for credit
• Expenses paid in cash
• Investment by stockholders
• Purchase of an asset for cash/on credit
• Payment of a liability
• Sales of an asset on credit
• Collection of Accounts Receivable
• Revenue
• Expense
• Paid Dividend
• Prepaid Rent

10
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• The left side of an account is

Answer the debit side.
11
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• An account consists of what three parts?

Answer Title, Debit Side, Credit Side
12
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• For a T account, an account balance is the
  difference in total dollars between total debit
  amounts and _____.

Answer total credit amounts
13
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• A ___ account is a way of depicting the basic
  form of an account.

Answer T
14
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• T Account for Assets

Answer Debit balance, Credit -
15
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• T Account for Expenses

Answer Debit balance, Credit -
16
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• T Account for Liabilities

Answer Credit balance, Debit -
17
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• T Account for Common Stock

Answer Credit balance, Debit -
18
SO2--Ch. 3 The Accounting Information System
Explain what an account is and how it helps in
the recording process.

• T account for Dividends

Answer Debit balance, Credit -
19
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• The equality of debits and credits provides the
  basis for the ____-____ accounting system.

Answer double-entry
20
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• What are the five subdivisions of
  stockholdersequity?

Answer Common stock, retained earnings,
dividends, revenues, and expenses
21
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• Under the double-entry accounting system, ____
  must always equal ____. Each transaction must be
  recorded in at least ____ different accounts.

Answer debits, credits, 2
22
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• The normal balance of any account is the side
  which _____ that account.

Answer increases
23
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• Which accounts normally have debit balances?

Answer assets, dividends, and expenses (ADE)
24
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• An accountant has debited an asset account for
  500 and credited a liability account for 200.
  What can be done to complete the recording of the
  transaction?

Answer Credit a different asset account for
300.
25
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• How are the terms debit and credit are
  abbreviated?

Answer Dr. and Cr.
26
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• Debit and credit can be interpreted to mean left
  and right and they can be used to describe the
  ____ of an account.

Answer balance
27
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• _____ have normal debit balances, decrease
  stockholders equity, and are a negative factor
  in computing net income.

Answer Expenses
28
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• If a company has overdrawn its bank balance, then
  its cash account will show a ____ balance.

Answer Credit
29
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• If a company has overdrawn its bank balance, then
  its cash account will show a ____ balance.

Answer Credit
30
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• Given a list of accounts without balance sides
  indicated, could you find the total of debits and
  the total of the credits for the trial balance?

Answer I hope so because you will see this on
the test!
31
SO3--Ch. 3 The Accounting Information
SystemDefine debits and credits and explain how
they are used to record business transactions.

• At Jan. 1, 2006, ABC Inc. reported Retained
  Earnings of 100,000. During the year, ABC had a
  net loss of 10,000 and paid 5,000 in dividends
  to stockholders. On December 31, 2006, what is
  the balance in Retained Earnings?

Answer 85,000
32
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• At October 1, 2007, Feet Industries had an
  accounts payable balance of 30,000. During the
  month, the company made purchases on account of
  25,000 and made payments on account of 40,000.
  At October 31, 2007, the accounts payable balance
  is ______.

Answer 15,000
33
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• Each transaction must be analyzed in terms of its
  effect on the accounts before it can be recorded
  in a ______.

Answer Journal
34
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• Examples of evidence that would help with
  determining the effects of a transaction would
  include

Answer cash register sales tape, bill
(invoice), check, memo, check
35
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• After transaction information has been recorded
  in the journal (book of original entry), it is
  transferred to the ____.

Answer ledger
36
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• The usual sequence of steps in the ____ process
  are analyze each transaction, enter the
  transaction in the journal, and transfer the
  information to the ledger accounts.

Answer recording
37
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• The final step in the recording process is to
  transfer the journal information to the ___.

Answer ledger
38
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• The recording process occurs repeatedly during
  the ____ ____.

Answer accounting period
39
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• The ____ is also called the book of original
  entry.

Answer journal
40
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• What are the three steps (listed in order) in the
  recording process?

Answer analyze, journal, ledger
41
SO4--Ch. 3 The Accounting Information
SystemIdentify the basic steps in the recording
process.

• In recording accounting transactions, evidence
  that a transaction has taken place is obtained
  from ____.

Answer source documents
42
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• Transactions are recorded in what order in the
  journal?

Answer Chronological
43
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• The complete effect of a transaction on accounts
  is disclosed in the _____.

Answer journal
44
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• The account titles used in journalizing
  transactions must be identical to the account
  titles in the ____.

Answer ledger
45
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• The basic format of a ___ would include a date
  column, account title column and brief
  explanation.

Answer journal
46
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• A complete journal entry includes the date of the
  transaction, the accounts and amounts to be
  debited and credited, and a ___ ____ of the
  transaction.

Answer brief explanation
47
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• A company that receives money in advance of
  performing a service would debit cash and credit
  ____ ___.

Answer Unearned Fees
48
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• The journal entry has the ___ entered first at
  the extreme left margin.

Answer debit account
49
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• How would you record in a journal a payment of
  Wages Expense for 500 and Advertising Expense
  400.

Answer Wages Expense
500 Advertising Expense 400
Cash in Bank 900
50
SO5--Ch. 3 The Accounting Information
SystemExplain what a journal is and how it helps
in the recording process.

• When a company receives a utility bill but will
  not pay it right away, it should debit utilities
  expense and credit _____ ____.

Answer accounts payable
51
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• What type of accounts are Prepaid rent and
  Prepaid expenses?

Answer assets
52
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• Unearned revenues are classified as ____ on the
  balance sheet.

Answer Liabilities
53
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• An account report that includes a list of
  accounts and their balances at a given time is
  called a ___.

Answer trial balance
54
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• The purpose of the ___ is to keep in one place
  all the information about changes in specific
  account balances.

Answer ledger
55
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• The usual ordering of accounts in the general
  ledger and chart of accounts is

Answer assets, liabilities, stockholders
equity, revenues and expenses
56
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• An accounting record that includes a list of
  accounts and their balances at a given time is
  called a ____.

Answer Trial Balance
57
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• The ledger accounts should be arranged in ___ ___
  order.

Answer financial statement
58
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• A person who wants to find out the balance of a
  particular account should look in the ___.

Answer ledger
59
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• The entire group of accounts maintained by a
  company is referred to collectively as a ___.

Answer ledger
60
SO6--Ch. 3 The Accounting Information
SystemExplain what a ledger is and how it helps
in the recording process.

• T/F Dividends are classified as expenses

Answer False
61
SO7--Ch. 3 The Accounting Information
SystemExplain what posting is and how it helps
in the recording process.

• The principle purpose of _____ is to accumulate
  the effects of journalized transactions in the
  individual accounts.

Answer Posting
62
SO7--Ch. 3 The Accounting Information
SystemExplain what posting is and how it helps
in the recording process.

• A _______ for a business firm lists the accounts
  in the ledger.

Answer chart of accounts
63
SO7--Ch. 3 The Accounting Information
SystemExplain what posting is and how it helps
in the recording process.

• Posting is performed by transferring information
  from the ___ to the ____.

Answer journal to the ledger
64
SO7--Ch. 3 The Accounting Information
SystemExplain what posting is and how it helps
in the recording process.

• A ______ for a business lists the accounts in the
  ledger.

Answer Chart of Accounts
65
SO8Ch. 3 The Accounting Information
SystemExplain the purposes of a trial balance.

• A _____ proves the mathematical equality of
  debits and credits after the posting process.

Answer trial balance
66
SO8Ch. 3 The Accounting Information
SystemExplain the purposes of a trial balance.

• A trial balance is prepared at the end of an
  _____ _____. It is also done after posting all
  journal entries at a given time.

Answer accounting period
67
SO8Ch. 3 The Accounting Information
SystemExplain the purposes of a trial balance.

• Give examples of why a trial balance may not
  balance.

Answer Transposition error on posting one side
of a journal entry to ledger, slide error, one
side not posted, one account posted to wrong
side, error in calculating the account balances.
68
SO8Ch. 3 The Accounting Information
SystemExplain the purposes of a trial balance.

• A trial balance would not help in detecting which
  type of errors?

Answer Transaction that is not journalized or
that is not posted, entry posted twice,
offsetting errors made in recording a transaction.
69
SO8Ch. 3 The Accounting Information
SystemExplain the purposes of a trial balance.

• A trial balance is a listing of ___ ___ ___ and
  balances.

Answer general ledger accounts