Chapter 2

Question 1

Account

Answer 1

The detailed record of the changes in a particular asset, liability, or stockholders’ equity.

Question 2

Assets

Answer 2

Economic Resources that provide a future benefit for a business.

Question 3

Stockholders’ Equity

Answer 3

Stockholders’ claim to the assets of a corporation.

Question 4

Expenses

Answer 4

Decreases in a stockholders’ equity from using resources to sell goods or services.

Question 5

Liabilities

Answer 5

Debts or obligations of a business.

Question 6

Revenues

Answer 6

Increases in stockholders’ equity from selling goods or services to customers.

Question 7

Transactions

Answer 7

Any economic event that has a financial impact on the business.

Question 8

Accounts Payable

Answer 8

Liabilities

Question 9

Cash

Answer 9

Asset

Question 10

Service Revenue

Answer 10

Revenue

Question 11

Prepaid rent

Answer 11

Asset

Question 12

Rent Expense

Answer 12

Expense

Question 13

Common Stock

Answer 13

Stockholders’ Equity

Question 14

Dividends

Answer 14

Stockholders’ Equity

Question 15

Accounts Receivable

Answer 15

Asset

Question 16

Salaries Expense

Answer 16

Expense

Question 17

Notes Payable

Answer 17

Liability

Question 18

The left side of an account is used to record

Answer 18

debits

Question 19

Suppose Green Products, Inc., has cash of $40,000, receivables of $29,000, and furniture and fixtures totaling $171,000. Green Products, Inc., owes $77,000 on account and has a $160,000 note payable. How much is the stockholders’ equity?

Answer 19

$3,000

• Assets: Cash $40,000; Receivables $29,000; Furniture and Fixtures $171,000
• Liabilities: Account Payable $77,000; Note Payable $160,000

(40,000+29,000+171,000)=(77,000+160,000)+SE

240,000=237,000+SE

240,000-237,000=3,000

SE=3,000

Question 20

Rent Expense Normal Balance

Answer 20

Debit

Question 21

Cash Normal Balance

Answer 21

Debit

Question 22

Accounts Payable Normal Balance

Answer 22

Credit

Question 23

Service Revenue Normal Balance

Answer 23

Credit

Question 24

Office Furniture Normal Balance

Answer 24

Debit

Question 25

Common Stock Normal Balance

Answer 25

Credit

Question 26

Land Normal Balance

Answer 26

Debit

Question 27

Dividends Normal Balance

Answer 27

Debit

Question 28

Office Equipment

Answer 28

Account Type- Asset Increase- Debit Decrease- Credit

Question 29

Dividends

Answer 29

Account Type- Stockholders' Equity Increase- Debit Decrease- Credit

Question 30

Service Revenue

Answer 30

Account Type- Revenue Increase- Credit Decrease- Debit

Question 31

Accounts Payable

Answer 31

Account Type- Liability Increase- Credit Decrease- Debit

Question 32

Rent Expense

Answer 32

Account Type- Expense Increase- Debit Decrease- Credit

Question 33

Cash

Answer 33

Account Type- Asset Increase- Debit Decrease- Credit

Question 34

Which sequence of actions correctly summarizes the accounting process?

Answer 34

Journalize transactions, post to the accounts, prepare a trial balance.

Question 35

The Blue Ox Restaurant recorded a cash collection on account by debiting Cash and crediting Accounts Payable. What will the trial balance show for this error?

Answer 35

Too much for liabilities and Too much for assets