Accounting 205: Chapter 2

Financial Statements

100

This reports the assets, liabilities, and stockholders' equity of a company at a specific period of time. 

Balance Sheet

200

This financial statement calculates Net Income/Net Loss. 

Income Statement 

300

This is the financial statement that Dividends appears in. 

Statement of Retained Earnings 

400

This is the account that revenues, expenses, and dividends appears as on the balance sheet. 

Retained Earnings

500

In what order do the financial statement need to be completed in? 

1. Income Statement

2. Statement of Retained Earnings

3. Balance Sheet

Accounting Cycle

100

What is the first step in the accounting cycle?

Analyze. 

200

What is it called when you transfer numbers from the journal to the ledger?

Posting. 

300

Which step in the recording process provides a chronological record of transactions?

Journalizing 

400

Which of the following is NOT part of the recording process?

a. analyzing transactions

b. preparing a trial balance

c. entering transactions in a journal

d. posting transactions

B. Preparing a trial balance 

500

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CH 2 Multiple Choice

100

Which of the following statements about an account is true? 

a. In its simplest form, an account consists of two parts

b. an account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items

c. There are separate accounts for specific assets and liabilities but only one account for owners equity items

d. the left side of an account is the credit or decrease side.  

b. an account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items

200

The normal balance of an account is on the side were a decrease in the account is recorded 

a. true

b. false 

False

300

The dividends account decreases stockholders' equity and is an income statement account like expenses

a. true

b. false

        

False

400

When a company earns revenues, stockholders' equity increases

a. true

b. false      

a. true 

500

Debits: 

a. increase both assets and liabs

b. decrease both assets and liabs

c. increase assets and decrease liabs 

d. decrease assets and increase liabs        

c. increase assets and decrease liabs

CH 2 Multiple Choice

100

A revenue account 

a. is increased by debits 

b. is decreased by credits 

c. has a normal balance of a debit 

d. is increased by credits

d. is increased by credits

200

Accounts that normally have debit balances are:

a. assets, exps, revs 

b. assets, exps, common stock 

c. assets, liabs, divs

d. assets, divs, exps 

d. assets, divs, exps

300

A credit to a liability account indicates a(n):

a. debit was made to an asset account

b. decrease in the liability 

c. increase in the liability 

d. error 

c. increase in the liability 

400

A debit is not the normal balance for which of the following? 

a. asset account 

b. dividends account 

c. expense account 

d. common stock account 

d. common stock account 

500

The first step in the recording process is to enter the transaction information in a journal

a. true

b. false

b. false

- the first step in the recording process is to analyze each transaction. 

CH 2 Definitions

100

This requires that companies record assets at their cost.

Historical Cost Principle 

200

This is a common set of guidelines used by accountants. 

GAAP

300

Distribution of stockholders. Reduce the stockholders' claims on retained earnings. 

Dividends 

400

List of accounts and their balances at a given time. 

Trial Balance 

500

This requires that the activities of the business be kept separate and distinct from the owner and all other businesses. 

Economic Entity Assumption