Chapter 2- The Recording Process

Question 1

The right side of an account

Answer 1

Credit

Question 2

A system that records in appropriate account the dual effect of each transaction

Answer 2

Double-entry system

Question 3

A record of increases and decreases in specific asset, liability, or stockholders’ equity items

Answer 3

Account

Question 4

A journal entry that involves only two accounts

Answer 4

Simple entry

Question 5

Issued in exchange for the owners’ investment paid in to corporation

Answer 5

Common stock

Question 6

A distribution by a corporation to it stockholders on a pro rata (equal) basis

Answer 6

Dividend

Question 7

The entering of transaction data in the journal

Answer 7

Journalizing

Question 8

The procedure of transferring journal entries to the ledger accounts

Answer 8

Posting

Question 9

A form with columns for debit, credit, and balance amounts in an account

Answer 9

Three-column form of account

Question 10

Net income that is kept (retained) in the business

Answer 10

Retained earnings

Question 11

An accounting record in which transactions are initially recorded in chronological order

Answer 11

Journal

Question 12

The basic form of an account, consisting of (1) a title, (2) a left or debit side, and (3) a right or credit side

Answer 12

T-account

Question 13

A list of accounts and account numbers that identify their location in the ledger

Answer 13

Chart of accounts

Question 14

List of accounts and account numbers used. The numbers identify their specific location in the ledger. No account balances are listed in this

Answer 14

Trial balance

Question 15

The left side of an account

Answer 15

Debit

Question 16

A ledger that contains all assets, liabilities, and stockholders’ equity accounts

Answer 16

General ledger

Question 17

Record of all transactions recorded by the company in chronological order. is where companies record all the transactions or journal entries

Answer 17

General journal

Question 18

The entire group of accounts maintained by a company

Answer 18

Ledger

Question 19

A journal entry that involves three or more accounts

Answer 19

Compound entry

Question 20

An account balance on the side where an increase in the account is recorded

Answer 20

Normal balance

Question 21

A record of increases and decreases in a specific asset, liability or stockholders equity item.

Answer 21

Account

Question 22

In order to have a balance journal entry, the total of the debit in the entry must equal the total of the credits in that entry

Answer 22

Debits must equal credits

Question 23

D E A D

Answer 23

Debits increase Expenses, Assets, and Dividends

Question 24

Recording process:

Answer 24

Analyze transaction>record in journal>post to ledger

Question 25

An asset representing the advance payment of cash for an expense to be incurred in the future. It is recorded as an asset because it provides a future benefit to the company.

Answer 25

Prepaid expense

Question 26

A liability representing the receipt of cash from a customer prior to providing services or selling a good to the customer. This is recorded as a liability because after receiving the payment, the company owes the service or they go to the customer.

Answer 26

Unearned revenue