Exam 2: The Accounting Information System

Several accounts from the financial records of Wynn Linders, Inc. are listed. Indicate its normal balance and the debit/credit rules for increasing the account. (Choices may be used more than once.) a.Debit b.Credit -Unearned Revenues

For each transaction provided, choose the appropriate account from the list that would receive a debit entry as a result of the transaction. (Choices may be used more than once.) a.Cash b.Accounts receivable c.Supplies d.Prepaid insurance e.Land f.Equipment g.Accounts payable h.Unearned revenues i.Notes payable j.Common stock k.Retained earnings l.Service revenue m.Salary expense n.Insurance expense o.Utilities expense p.Dividends -Purchasing supplies on credit

-Refer to H&R Clock Company. Prepare a trial balance in proper format. Assume that the company had no additional accounts or balances other than those created from the July transactions.

The qualitative characteristics of accounting information include

Which of the following statements regarding a company's operating activities is true?

An entry made to the right side of an account is always a(n)

The Securities Exchange Commission (SEC)is concerned with

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Paying utilities

Under the double-entry system of accounting, a debit is always a negative entry.

Match the following principles with their correct definition. a.Comparability g.Historical cost b.Conservatism h.Matching c.Double-entry accounting i.Monetary unit d.Economic entity j.Revenue recognition e.Going concern k.Time period f.Full disclosure -This principle states that users should be able to make meaningful comparisons of different companies.

The purchase of office supplies from a supplier is an example of an external event.

Several transactions are listed. Use the choices to identify the effect on the accounting equation for each transaction listed. (Choices may be used more than once.) a.Assets and liabilities increase b.Assets and contributed capital increase c.Assets and retained earnings increase d.Two asset accounts are impacted, but there is no net effect on total assets e.Assets and liabilities decrease f.Assets and retained earnings decrease g.Liabilities increase and retained earnings decrease h.Liabilities decrease and retained earnings increase -Paying salaries to employees

Select the choice that describes the type of transaction and whether it should be recorded in the accounting system. (Choices may be used more than once.) a.External event to be recorded as a transaction b.Internal event to be recorded as a transaction c.Event which should not be recognized in the accounting system -A bill is received for the current month's utilities.

Selected accounts at July 31 are provided below: -Refer to Happy Heights Country Club. On which date did the country club collect golf lessons revenue in advance?

Presented below are accounts from the general ledger: Each of the accounts has been assigned an identification number which you will use as answers for the transactions described below. Enter the account numbers in the blank spaces under the headings Debit and Credit to indicate the accounts debited and credited when each transaction is recorded in a general journal.

Match the following principles with their correct definition. a.Comparability g.Historical cost b.Conservatism h.Matching c.Double-entry accounting i.Monetary unit d.Economic entity j.Revenue recognition e.Going concern k.Time period f.Full disclosure -This assumption requires that financial information be reported in monetary terms.

-Refer to Home Accent Interiors. Identify the postings to the general ledger that were made incorrectly. Describe how each incorrect posting should have been made. For this problem, assume that the journal entries have been correctly recorded.

Match the following terms with their correct definition. a.Account f.Debit b.Accounting cycle g.Event c.Chart of accounts h.General ledger d.Cost vs. benefit i.Journal e.Credit j.Trial balance -A collection of all the individual financial statement accounts that a company uses.

Assume that the incorrect journal entries have been posted to the general ledger. For each incorrect journal entry, explain why the error would or would not be discovered by preparing a trial balance.

The ____________________ is a list of all the accounts used by an entity.