Exam 2: The Recording Process

An account consists of

Companies report share capital-ordinary and dividends in the equity section of the statement of financial position.

Prepare journal entries for each of the following transactions. 1. Performed services for customers on account €6,000. 2. Purchased €20,000 of equipment on account. 3. Received €3,000 from customers in transaction 1. 4. The company paid dividends of €1,000.

Post the following transactions to T-accounts and determine each account's ending balance.

A debit to an asset account indicates

Transactions for Tom Petty Company for the month of October are presented below. Journalize each transaction and identify each transaction by number. You may omit journal explanations. 1. Issued ordinary shares in exchange for $50,000 cash. 2. Purchased land costing $28,000 for cash. 3. Purchased equipment costing $20,000 for $3,000 cash and the remainder on credit. 4. Purchased supplies on account for $800. 5. Paid $1,000 for a one-year insurance policy. 6. Received $3,000 cash for services performed. 7. Received $4,000 for services previously performed on account. 8. Paid salaries to employees for $2,500. 9. Paid dividends of $1,000.

Caria and Associates is a financial planning service. The account balances at December 31, 2014 are shown by the following alphabetical list: Instructions Prepare a trial balance with the accounts arranged in proper order.

Your roommate, a marketing major, thinks that debit means decrease and credit means increase. And, that every account can be debited and credited and as result, every account can have both a debit and a credit balance. Explain to your roommate (1) the meaning of debit and credit; (2) which accounts can only be debited, which can only be credited, and which can be both debited and credited; and (3) which accounts normally have debit balances and which credit balances.

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (-). Debit_ _Credit_ Normal Balance 1. Salaries and Wages Expense. 2. Accounts Receivable. 3. Service Revenue. 4. Share Capital-Ordinary. 5. Dividends.

Transaction information may be entered directly into the accounts without using a journal.

Business documents can provide evidence that a transaction has occurred.

The general rules of debit and credit, and the steps in the recording process-the journal, ledger, and chart of accounts-are the same under both GAAP and IFRS.

The first step in designing a computerized accounting system is the creation of the

The ledger is merely a bookkeeping device and therefore does not provide much useful data for management.

Which of the following statements is not true?

An accountant has debited an asset account for $1,000 and credited a liability account for $500. What can be done to complete the recording of the transaction?

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

A trial balance will not balance if

A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits. a. Can the student be successful in the course without an understanding of the rules of debits and credits? b. Explain the rules of debits and credits in a way that will help him understand them.

A general ledger should be arranged in the order in which accounts are presented in the financial statements, beginning with the statement of financal position accounts.