Exam 2: The Accounting Information System

The ____________________ is the file or book that contains all of the company's accounts.

-Refer to Hatcher Tool Service. Prepare a trial balance in proper format. Assume that there are no additional accounts or balances other than those created from the June transactions.

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 -Collecting cash from customers who had previously made credit purchases

What is meant by "generally accepted accounting principles"?

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 -Notes Payable

A novelties company makes cash sales to customers. What effect does this transaction have on the accounting equation?

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 -Receiving cash from a customer in advance of providing any services

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 -Tax returns are prepared by the company's accountant.

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

Several terms which represent components of an accounting system are listed below. For each term, write a brief explanation of how that component is used in the accounting cycle.

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 -Borrowing cash from a bank

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 equipment for cash

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

Machinery is purchased on credit. What effect does this transaction have on the accounting equation?

The ___________________ is a list of each active account and its debit or credit balance at a specific point in time.

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 -Receiving cash from customers in advance for services to be provided next month

Several transactions are listed below, with the accounting equation stated to the right side of each. Use the following identification codes to indicate the effects of each transaction on the accounting equation: I = Increase; D = Decrease; NE = No Effect. Write your answers in the space provided under the accounting equation, being sure to include an identification code for each element of the accounting equation. An example is provided before the first transaction.

Selected accounts at July 31 are provided below: -Refer to HVAC Service. The journal entry to record the bill received from WKRP Radio will include a debit to

An accountant is uncertain about the best estimate of an amount for a business transaction. If there are two possible amounts that could be recorded, the amount least likely to overstate assets and earnings is selected. Which of the following qualities is characterized by this action?

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 requires that the activities of a company be initially measured at their exchange price at the time the activity occurs.