Questions and Answers
The correct definition of an 'account' includes which of the following?
The general ledger can be used to determine which of the following? (Select all answers which apply)
Assets are claims (by creditors) against the company.
False
From the lists of items below, choose the one which includes only items that would be defined as cash.
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Which of the following statements is (are) true about accounts receivables? (Check all that apply)
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An account is a record of increases and ____ in a specific asset, liability, equity, revenue, or expense.
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Given the descriptions below, which is (are) true regarding notes receivable? (Check all that apply)
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Which of the following describes a general ledger?
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Which of the following statements is the best definition of an asset?
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Which of the following items would be considered 'cash' and reflected in a company's Cash account? (Check all that apply)
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Accounts receivable are (increased/decreased) by credit sales and are (increased/decreased) by customer payments.
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Notes receivable is considered a(n) (______/liability).
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Which of the following statements is correct about prepaid accounts?
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Which of the following are examples of prepaid (expense) accounts? (Check all that apply)
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When financial statements are prepared, unexpired prepaid accounts are recorded as (expenses/assets/liabilities) and the expired portion of the prepaid account is reported as a(n) (expense/asset/liability).
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Which of the following statements are accurate regarding how to report or treat prepaid accounts? (Check all that apply)
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Which of the following statements are accurate regarding supplies? (Check all that apply)
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Select the statement below that best defines prepaid accounts.
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Which of the following statements are accurate regarding equipment purchased within a business? (Check all that apply)
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When the product or service related to an unearned revenue is delivered, the earned portion of the unearned revenue is transferred to a _____ account.
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Dividends decrease equity. Which of the following statements is accurate regarding dividends?
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Which of the following are examples of accrued liabilities? (Check all that apply)
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The Dividends account is used to record (investments/dividends/expenses/revenues) by the owner and has a (positive/negative) impact on equity.
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The account title is shown at the top of a T-account.
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Accrued liabilities are amounts owed that are not paid.
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Study Notes
Accounts and Definitions
- An account is a record of increases and decreases in specific items such as assets, liabilities, equity, revenue, or expenses.
- Accounts receivable reflects amounts owed by customers and increases with credit sales.
- Notes receivable is also known as a promissory note, classified as an asset, and represents a promise of payment at a future date.
General Ledger Insights
- The general ledger contains all accounts used by a company, detailing their balances and changes over time.
- It provides insights into which accounts are operational and any increases or decreases.
Assets and Cash
- Assets are resources owned or controlled by a company that provide expected future benefits.
- Cash includes coins, checks, and money orders, as well as funds available in a company's cash account.
Prepaid and Accrued Accounts
- Prepaid accounts (or prepaid expenses) are considered assets and represent prepayments for future expenses. Unexpired portions are recorded as assets while expired portions are recognized as expenses.
- Accrued liabilities indicate amounts due that have not been paid yet, such as interest payable, taxes payable, and wages payable.
Treatment of Supplies and Equipment
- Supplies remain classified as assets until utilized, thereafter recorded as expenses; examples include store and office supplies.
- Equipment is reported as an asset on the balance sheet and its cost is expensed over the useful life as it depreciates.
Dividends Impacts
- Dividends decrease equity and are noted on the left side of the T-account, representing distributions of assets to owners.
T-account Functionality
- T-accounts are tools used to visualize transaction effects, showing debit and credit sides; asset accounts increase on the left (debit) and liabilities increase on the right (credit).
Revenue Recognition and Unearned Revenue
- When related products or services are delivered, earned portions of unearned revenue are transferred to revenue accounts, reflecting the fulfillment of obligations incurred by advance payments.
Key Terminology
- Assets, Expenses, Liabilities, Equity, Debits, and Credits form the foundational terms for financial reporting and accounting practices.
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Test your knowledge on key accounting concepts in ACC 200 Chapter 2 with these flashcards. Each card presents important definitions and examples relevant to financial accounts and ledger management. Perfect for reviewing core topics before exams.