Financial Accounting - Chapter 2

Which sequence correctly summarizes the accounting process?

Journalize transactions, post to the accounts, prepare a trial balance

Journalize transactions, prepare a trial balance, post to the accounts

Post to the accounts, journalize transactions, prepare a trial balance

Prepare a trial balance, journalize transactions, post to the accounts

The detailed record of the changes in a particular asset, liability, or owner’s equity is called

An account

A journal

A ledger

A trial balance

A T-account has two sides, called the

Debit and credit

Asset and liability

Revenue and expense

Journal and ledger

Increases in liabilities are recorded by

Debits

Credits

Why do accountants record transactions in the journal?

To ensure all transactions are posted to the ledger

To ensure total debits equal total credits

To have a chronological record of all transactions

To help prepare the financial statements

The purchase of land for cash is recorded by a

Debit to Cash and a credit to Land

Debit to Cash and a debit to Land

Debit to Land and a credit to Cash

Credit to Cash and a credit to Land

Simpson Transport earned revenue on account. The earning of revenue on account is recorded by a

Ebit to Cash and a credit to Revenue

Debit to Accounts Receivable and a credit to Revenue

Debit to Accounts Payable and a credit to Revenue

Debit to Revenue and a credit to Accounts Receivable

The account credited for a receipt of cash on account is

Cash

Accounts Payable

Service Revenue

Accounts Receivable

The purpose of the trial balance is to

List all accounts with their balances

Ensure all transactions have been recorded

Speed up the collection of cash receipts from customers

Increase assets and owner’s equity

Posting is the process of transferring information from the

Journal to the trial balance

Ledger to the trial balance

Ledger to the financial statements

Journal to the ledger

Debit means decrease and credit means increase

True

False

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