Fundamental Accounting Principles Chapter 1, 2, & 3 Questions with Detailed Verified Answers

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Fundamental Accounting Principles
Chapter 1, 2, & 3 Questions with
Detailed Verified Answers

Question: SOURCE DOCUMENTS
Answer: Identify and describe transactions and events entering the
accounting process Examples- Sales tickets, checks, purchase orders, bills
from suppliers, employee earning records, and bank statements


Question:ACCOUNTS RECEIVABLE
Answer: held by seller and refer to promises of payment from customers to
sellers, Increased by credit and decreased by customer payments


Question:PREPAID ACCOUNTS
Answer: are assets that represent prepayments of future expenses. When
expense is incurred, the amounts in prepaid accounts are transferred to
expense accounts


Question:SUPPLIES
Answer: are assets until they are used, when used up their costs are reported
as expenses


Question:EQUIPMENT
Answer: Is an asset, overtime worn down equipment is gradually reported as
expense ( depreciation)

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Question:ACCOUNTS PAYABLE
Answer: refer to oral o implied promises to pay later. Accounting systems
keep separate records about each creditor.


Question:NOTE PAYABLE
Answer: formal promise usually denoted b the signing of a promissory note to
pay future amount


Question:UNEARNED REVENUE
Answer: liability that is settled in the future when a company delivers its
products or services


Question:OWNER, CAPITAL
Answer: owner invests in a company, invested amount is recorded


Question:OWNER, WITHDRAWLS
Answer: owner makes a withdraw it decreases equity along with assets


Question:EXPENSES
Answer: Decrease equity


Question:REVENUES
Answer: Increase Equity


Question:DEBIT
Answer: left side of an account- DR.