TEST BANK FOR ACCOUNTING
#zd #zd #zd
PRINCIPLES, VOLUME 1, 8TH
#zd #zd #zd #zd
CANADIAN EDITION JERRY J.
#zd #zd #zd #zd
WEYGANDT, DONALD E. KIESO, PAUL
#zd #zd #zd #zd #zd
D. KIMMEL, BARBARA TRENHOLM,
#zd #zd #zd
VALERIE WARREN, LORI NOVAK
#zd #zd #zd #zd
SCHOLARVAULT
, CHAPTER 2
THE RECORDING PROCESS
CHAPTER LEARNING OBJECTIVES
1. Describe how accounts, debits, and credits are used to record business transactions. Debit
means left and credit means right. The normal balance of an asset is a debit because assets are
on the left side of the accounting equation. Assets are increased by debits and decreased by
credits. The normal balance of liabilities and owner’s capital is a credit because they are on the
right side of the accounting equation. Liabilities and owner’s capital are increased by credits
and decreased by debits. Revenues increase owner’s equity and therefore are recorded as
credits because credits increase owner’s equity. Credits increase revenues and debits decrease
revenues. Expenses and drawings decrease owner’s equity and therefore are recorded as
debits because debits decrease owner’s equity. Expenses and drawings are increased by debits
and decreased by credits.
2. State how a journal is used in the recording process and journalize transactions. The steps in the
recording process are the first three steps in the accounting cycle. These steps are: (a) analyze
each transaction for its effect on the accounts, (b) record the transaction in a journal, and (c)
transfer the journal information to the correct accounts in the ledger.
A journal: (a) discloses the complete effect of a transaction in one place, (b) provides a
chronological record of transactions, (c) helps to prevent and locate errors because the debit
and credit amounts for each entry can be easily compared, and (d) explains the transaction
and, if there is one, identifies the source document.
3. Explain how a ledger helps in the recording process and post transactions. The entire group of
accounts maintained by a company is called the ledger. The ledger keeps in one place all the
information about changes in each of the specific account balances. Posting is the procedure of
transferring journal entries to the ledger accounts. After the journal entries have been posted,
the ledger will show all of the increases and decreases that have been made to each account.
4. Prepare a trial balance. A trial balance is a list of the accounts in the ledger and the account
balances at a specific time. Its main purpose is to prove that debits and credits are equal after
posting. A trial balance uncovers certain types of errors in journalizing and posting, and is
useful in preparing financial statements. Preparing a trial balance is the fourth step in the
accounting cycle.
SCHOLARVAULT
, EXERCISES
Exercise #zd1
Identify #zdeach #zdof #zdthe #zdfollowing #zdaccounts #zdas #zdan #zdasset, #zdliability, #zdequity, #zdrevenue #zdor #zdexpense.
1. L. #zdRalph, #zdCapital #zd
#zd
2. Consulting #zdRevenue
#zd
3. Accounts #zdPayable
#zd
4. Office #zdSupplies
#zd
5. Prepaid #zdAdvertising
#zd
6. Machinery
#zd
7. Cash
#zd
8. L. #zdRalph, #zdWithdrawals
#zd
9. Salaries #zdExpense
#zd
10. # z d Repairs #zd&
#zdMaintenance
#zd
11. # z d Accounts #zdReceivable
#zd
12. # z d Unearned #zdRevenue
13. # z d Rent #zdRevenue #zd
Solution #zd1 #zd(5 #zdmin.)
1. Equity
2. Revenue
3. Liability
4. Asset
5. Asset
6. Asset
7. Asset
8. Equity
9. Expense
10. Expense
11. Asset
12. Liability
13. Revenue
Bloomcode:
#zdComprehension
#zdDifficulty: #zdEasy
SCHOLARVAULT
, Learning #zdObjective: #zdDescribe #zdhow #zdaccounts, #zddebits, #zdand #zdcredits #zdare #zdused #zdto #zdrecord
#zdbusiness #zdtransactions.
Section #zdReference: #zdThe
#zdAccount #zdCPA: #zdFinancial
#zdReporting #zdAACSB: #zdAnalytic
Exercise #zd2
For #zdthe #zdaccounts #zdlisted #zdbelow, #zdindicate #zdif #zdthe #zdnormal #zdbalance #zdof #zdthe #zdaccount #zdis #zda #zddebit #zdor
#zdcredit.
Normal #zdBalance
Accounts Debit #zdor #zdCredit
1. Repairs #zd& #zdMaintenance
2. Interest #zdReceivable
3. Prepaid #zdInsurance
4. Unearned #zdRevenue
5. Insurance #zdExpense
6. Service #zdRevenue
7. Machinery
8. Notes #zdPayable
9. Land
10. Owner #zdWithdrawals
Solution #zd2 #zd(5 #zdmin.)
Normal #zdBalance
Accounts Debit #zdor #zdCredit
1. Repairs #zd& #zdMaintenance Debit
2. Interest #zdReceivable Debit
3. Prepaid #zdInsurance Debit
4. Unearned #zdRevenue Credit
5. Insurance #zdExpense Debit
6. Service #zdRevenue Credit
7. Machinery Debit
8. Notes #zdPayable Credit
9. Land Debit
10. Owner #zdWithdrawals Debit
Bloomcode:
#zdComprehension
#zdDifficulty: #zdEasy
Learning #zdObjective: #zdDescribe #zdhow #zdaccounts, #zddebits, #zdand #zdcredits #zdare #zdused #zdto #zdrecord
#zdbusiness #zdtransactions.
SCHOLARVAULT
#zd #zd #zd
PRINCIPLES, VOLUME 1, 8TH
#zd #zd #zd #zd
CANADIAN EDITION JERRY J.
#zd #zd #zd #zd
WEYGANDT, DONALD E. KIESO, PAUL
#zd #zd #zd #zd #zd
D. KIMMEL, BARBARA TRENHOLM,
#zd #zd #zd
VALERIE WARREN, LORI NOVAK
#zd #zd #zd #zd
SCHOLARVAULT
, CHAPTER 2
THE RECORDING PROCESS
CHAPTER LEARNING OBJECTIVES
1. Describe how accounts, debits, and credits are used to record business transactions. Debit
means left and credit means right. The normal balance of an asset is a debit because assets are
on the left side of the accounting equation. Assets are increased by debits and decreased by
credits. The normal balance of liabilities and owner’s capital is a credit because they are on the
right side of the accounting equation. Liabilities and owner’s capital are increased by credits
and decreased by debits. Revenues increase owner’s equity and therefore are recorded as
credits because credits increase owner’s equity. Credits increase revenues and debits decrease
revenues. Expenses and drawings decrease owner’s equity and therefore are recorded as
debits because debits decrease owner’s equity. Expenses and drawings are increased by debits
and decreased by credits.
2. State how a journal is used in the recording process and journalize transactions. The steps in the
recording process are the first three steps in the accounting cycle. These steps are: (a) analyze
each transaction for its effect on the accounts, (b) record the transaction in a journal, and (c)
transfer the journal information to the correct accounts in the ledger.
A journal: (a) discloses the complete effect of a transaction in one place, (b) provides a
chronological record of transactions, (c) helps to prevent and locate errors because the debit
and credit amounts for each entry can be easily compared, and (d) explains the transaction
and, if there is one, identifies the source document.
3. Explain how a ledger helps in the recording process and post transactions. The entire group of
accounts maintained by a company is called the ledger. The ledger keeps in one place all the
information about changes in each of the specific account balances. Posting is the procedure of
transferring journal entries to the ledger accounts. After the journal entries have been posted,
the ledger will show all of the increases and decreases that have been made to each account.
4. Prepare a trial balance. A trial balance is a list of the accounts in the ledger and the account
balances at a specific time. Its main purpose is to prove that debits and credits are equal after
posting. A trial balance uncovers certain types of errors in journalizing and posting, and is
useful in preparing financial statements. Preparing a trial balance is the fourth step in the
accounting cycle.
SCHOLARVAULT
, EXERCISES
Exercise #zd1
Identify #zdeach #zdof #zdthe #zdfollowing #zdaccounts #zdas #zdan #zdasset, #zdliability, #zdequity, #zdrevenue #zdor #zdexpense.
1. L. #zdRalph, #zdCapital #zd
#zd
2. Consulting #zdRevenue
#zd
3. Accounts #zdPayable
#zd
4. Office #zdSupplies
#zd
5. Prepaid #zdAdvertising
#zd
6. Machinery
#zd
7. Cash
#zd
8. L. #zdRalph, #zdWithdrawals
#zd
9. Salaries #zdExpense
#zd
10. # z d Repairs #zd&
#zdMaintenance
#zd
11. # z d Accounts #zdReceivable
#zd
12. # z d Unearned #zdRevenue
13. # z d Rent #zdRevenue #zd
Solution #zd1 #zd(5 #zdmin.)
1. Equity
2. Revenue
3. Liability
4. Asset
5. Asset
6. Asset
7. Asset
8. Equity
9. Expense
10. Expense
11. Asset
12. Liability
13. Revenue
Bloomcode:
#zdComprehension
#zdDifficulty: #zdEasy
SCHOLARVAULT
, Learning #zdObjective: #zdDescribe #zdhow #zdaccounts, #zddebits, #zdand #zdcredits #zdare #zdused #zdto #zdrecord
#zdbusiness #zdtransactions.
Section #zdReference: #zdThe
#zdAccount #zdCPA: #zdFinancial
#zdReporting #zdAACSB: #zdAnalytic
Exercise #zd2
For #zdthe #zdaccounts #zdlisted #zdbelow, #zdindicate #zdif #zdthe #zdnormal #zdbalance #zdof #zdthe #zdaccount #zdis #zda #zddebit #zdor
#zdcredit.
Normal #zdBalance
Accounts Debit #zdor #zdCredit
1. Repairs #zd& #zdMaintenance
2. Interest #zdReceivable
3. Prepaid #zdInsurance
4. Unearned #zdRevenue
5. Insurance #zdExpense
6. Service #zdRevenue
7. Machinery
8. Notes #zdPayable
9. Land
10. Owner #zdWithdrawals
Solution #zd2 #zd(5 #zdmin.)
Normal #zdBalance
Accounts Debit #zdor #zdCredit
1. Repairs #zd& #zdMaintenance Debit
2. Interest #zdReceivable Debit
3. Prepaid #zdInsurance Debit
4. Unearned #zdRevenue Credit
5. Insurance #zdExpense Debit
6. Service #zdRevenue Credit
7. Machinery Debit
8. Notes #zdPayable Credit
9. Land Debit
10. Owner #zdWithdrawals Debit
Bloomcode:
#zdComprehension
#zdDifficulty: #zdEasy
Learning #zdObjective: #zdDescribe #zdhow #zdaccounts, #zddebits, #zdand #zdcredits #zdare #zdused #zdto #zdrecord
#zdbusiness #zdtransactions.
SCHOLARVAULT
