Exam 2: The Recording Process

For the basic accounting equation to stay in balance, each transaction recorded must

The entire group of accounts maintained by a company is called the

Which of the following accounts is reported in the equity section of the statement of financial position?

The chart of accounts is a special ledger used in accounting systems.

During an accounting period, a business has numerous transactions affecting each of the following accounts. State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries.

The transactions of the Buy It Now Store are recorded in the general journal below. You are to post the journal entries to T-accounts.

The standard format of a journal would not include

Martin's Mail Service purchased equipment for $4,000. Martin paid $500 in cash and signed a note for the balance. Martin debited the Equipment account, credited Cash and

The transactions of Medina Information Service are recorded in the general journal below. You are to post the journal entries to the accounts in the general ledger. After all entries have been posted, you are to prepare a trial balance on the form provided.

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

The final step in the recording process is to

Selected transactions for Sweet Home, a property management company, in its first month of business, are as follows. Jan. 2 Issued ordinary shares to investors for $15,000 cash. 3 Purchased used car for $4,000 cash for use in business. 9 Purchased supplies on account for $500. 11 Billed customers $1,800 for services performed. 16 Paid $200 cash for advertising. 20 Received $700 cash from customers billed on January 11. 23 Paid creditor $300 cash on balance owed. 28 Paid dividends of $2,000. Instructions For each transaction indicate the following. (a) The basic type of account debited and credited (asset (A), liability (L), equity (E)). (b) The specific account debited and credited (cash, rent expense, service revenue, etc.). (c) Whether the specific account is increased (incr.) or decreased (decr). (d) The normal balance of the specific account. Use the following format, in which the January 2 transaction is given as an example.

Rusthe Company showed the following balances at the end of its first year: What did Rusthe Company show as total credits on its trial balance?

Indicate for each debit and each credit: (a) whether an asset, liability, equity, revenue, or expense account was affected and (b) whether the account was increased (+) or (-) decreased. Answers should be presented in the following chart form:

The chart of accounts lists accounts and the account numbers that identify their location in the ledger starting with the accounts that are reported on the income statement.

The usual ordering of accounts in the general ledger is

The complete effect of a transaction on the accounts is disclosed in the journal.

For each of the following transactions of Chen Inc., identify the account to be debited and the account to be credited. 1. Purchased 18-month insurance policy for cash. 2. Paid weekly payroll. 3. Purchased supplies on account. 4. Received utility bill to be paid at later date.

A trial balance would only help in detecting which one of the following errors?

Which of the following statement is true regarding the recording process?