Cheques, invoices, and sales receipts are examples of business papers.
True / False
True
An account is used to record and summarize the increases and decreases in each type of revenue, expense, asset, liability, or owner's equity item.
True / False
True
Prepaid insurance is an example of an asset that will be consumed in the operation of the business; and as it is consumed, it will become an expense for the time period in which it was consumed.
True / False
True
When a firm collects money in advance of providing a service or delivering a product to a customer, the amount should be recorded as a prepaid asset.
True / False
False
The term credit, as it is used in recording journal entries, means to increase the balance of an account.
True / False
False
Any transaction, no matter how complex, can be recorded in a general journal under the double-entry accounting system.
True / False
True
A journal entry in which more than two accounts are involved is known as a combined journal entry.
True / False
False
A journal is known as a book of final entry.
True / False
False
The group of accounts used by a business in recording its transactions is known as the ledger.
True / False
True
Transcribing the debit amounts and the credit amounts from the general journal to the accounts in the ledger for summarization is known as posting.
True / False
True
When posting manually to the general ledger, it is not necessary to record the number of the posted account in the general journal when you are certain that you have posted to the correct account.
True / False
False
Electronic posting is more complicated than manual posting.
True / False
False
A list of all the accounts with balances, and their respective balances, is called a balance sheet or statement of financial position.
True / False
False
A trial balance with equal debit and credit totals is proof that no errors occurred in the journalizing or posting procedures used by the bookkeeper.
True / False
False
Cash, Prepaid Insurance, Office Supplies, and Rent Expense are accounts that will increase when debited.
True / False
True
Prepaid Insurance, Cash, Accounts Receivable, Notes Receivable, Land, and Unearned Revenues are all classified as asset accounts.
True / False
False
All receivables are classified as liability accounts and all payables are classified as asset accounts.
True / False
False
The owner's Capital account will increase with additional investment, increase with net income (revenues larger than expenses) and decrease with withdrawals by the owner.
True / False
True
On the chart of accounts revenues may be numbered in the 400's followed by expenses numbered in the 500's.
True / False
True
The left side of an account is always the debit side and always the increase side.
True / False
False
The normal balance for assets and expenses is a debit balance. The normal balance for liabilities, equities (except withdrawals), and revenues is a credit balance.
True / False
True
The Cash account has debits totaling $4,500 and credits totaling $4,600. The account balance is a normal balance of $100.
True / False
False
An _______________ is a place or location within an accounting system in which the increases and decreases in a specific asset, liability, equity, revenue, or expense are recorded and stored.
ACCOUNT
The difference between the increases (including the beginning balance) and decreases recorded in an account is called the account _______________.
BALANCE
An account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted is called a _______________ ledger account.
BALANCE COLUMN
A _______________ of accounts acts as an index to all the accounts used by a company.
CHART
A journal entry in which cash and accounts receivable are debited and revenue is credited is an example of a _______________ journal entry.
COMPOUND
A _______________ entry decreases asset and expense accounts or increases liability, owner's equity, and revenue accounts.
CREDIT
A _______________ entry increases asset and expense accounts or decreases liability, owner's equity, and revenue accounts.
DEBIT
A _______________ accounting system is an accounting system where every transaction affects and is recorded in at least two accounts.
DOUBLE-ENTRY
Exchanges between the entity and some other person or organization are called _______________ transactions.
EXTERNAL
The most flexible type of journal is the _______________ journal.
GENERAL
A record where transactions are recorded before they are recorded in accounts is called a _______________. It is also called a book of original entry.
JOURNAL
_______________ is the process of recording transactions in a journal.
JOURNALIZING
A _______________ is a record containing all accounts used by a business.
LEDGER
An unconditional written promise from a customer to pay a definite sum of money on demand or on a defined future date(s) is called a note _______________.
RECEIVABLE
_______________ is the process of transferring journal entry information to the ledger.
POSTING
Another name for business papers is _______________ documents.
SOURCE
The is a simple account form used as a helpful tool in showing the effects of transactions and events on specific accounts.
T-ACCOUNT
A _______________ is a list of accounts and their balances at a point in time.
TRIAL BALANCE
Liabilities created when customers pay in advance for products or services are called _______________ revenues.
UNEARNED
A place or location within an accounting system in which the increases and decreases in a specific asset, liability, stockholders' equity, revenue, or expense are recorded and stored.
Account
An account with debit and credit columns for recording entries and a third column for showing the balance of the account after each entry is posted.
Balance column ledger account
A list of all accounts used by a company; includes the identification number assigned to each account.
Chart of accounts
A journal entry that affects at least three accounts.
Compound journal entry
An accounting system where every transaction affects and is recorded in at least two accounts; the sum of the debits for all entries must equal the sum of the credits for all entries.
Double-entry accounting
A record where transactions are recorded before they are recorded in accounts; amounts are posted from the journal to the ledger; also called the book of original entry.
Journal
A record containing all accounts used by a business.
Ledger
A column in journals where individual account numbers are entered when entries are posted to the ledger.
Posting Reference (PR) column
An asset account containing payments made for assets that are not used until later.
Prepaid Expenses
A simple account form used as a helpful tool in showing the effects of transactions and events on specific accounts.
T-account
A list of accounts and their balances at a point in time; the total debit balances should equal the total credit balances.
Trial balance
