Ch 2 - The Recording Process Flashcards
Credits:
A) Increase both assets and liabilities
B) Decrease both assets and liabilities
C) Increase assets and decrease liabilities
D) Decrease assets and increase liabilities
D) Decrease assets and increase liabilities
Accounts that normally have a debit balance are:
All Assets. Expenses. Drawings
Debits will also decrease liabilities or owner’s equity
Accounts that normally have a credit balance:
Liabilities and Owner’s equity. Revenues
What is the correct sequence of steps in the recording process?
Analyzing transactions, entering transactions in a journal, posting transactions
Performing services for a customer on account should result in:
An increase to Asset account Accounts Receivable and an increase to the revenue account Service Revenue
The purchase of equipment on account should result in:
A debit to Equipment and credit to Accounts Payable
A ledger:
A) contains only asset and liability accounts
B) Should show accounts in alphabetical order
C) Is a collection of the entire group of accounts maintained by a company
D) Is a book of original entry
C) A collection of the entire group of accounts maintained by a company
What is a trial balance?
A list of accounts in the ledger with their balances at a specific time. Main purpose is to prove (check) that the debits equal the credits after posting.
A trial balance will not balance if:
A) The collection of an account receivable is posed twice
B) THe purchase of supplies on account is debited to Supplies and credited to Cash
C) A $100 cash drawing by the owner is debited to Drawings for $1000 and credited to Cash for $100
D) A $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45
C. The rest although may not be correct, the trial balance would not catch the error
How do you calculate profit (or loss)
Revenue - expense
How do you calculate Accounts receivable if you didn’t know it?
Current assets - cash - inventory = Accounts receivable
