Exam 2: The Accounting Information System

____________________ documents provide the evidence needed in an accounting system to record a transaction.

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 accountants should take care to avoid overstating assets or income when they prepare financial statements.

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 -Prepaid Insurance

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 -Collecting from customers for services sold previously on credit

Credits are always on the ____________________ side of a T-account.

Which of the following transactions does not affect total assets?

The chronological record in which transactions are initially recorded in the order in which they occur is called a(n)

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 states that in the absence of information to the contrary, it should be assumed that a company will continue to operate indefinitely.

Which of the following will not cause a trial balance to be out of balance?

If the sum of the debits is not equal to the sum of the credits in a trial balance, then

The term used to refer to an asset's original cost is book value.

Which of the following accounts is increased by a debit entry?

Even though a trial balance reveals that the debits equal the credits, there still may be errors in the company's books.

A company purchased equipment for $150,000 cash. What is the effect on total assets?

The term for the process of recording business events in a book of original entry is

-The list of accounts presented below are from the accounting records of Hoosier Momma Promotions on September 30, 2013. Assume that each account balance is normal, and present them in proper trial balance format.

An accounting transaction may impact only one financial statement or multiple statements.

When a firm borrows money, one effect on the accounting equation is a(n)

-Refer to H&R Clock Company. Use the following format to indicate the economic effects of each transaction above on the expanded accounting equation. Show the dollar amounts in the appropriate columns and use a plus (+)sign to indicate an increase and a minus (-)sign to indicate a decrease.

All of the following accounts have normal credit balances except