Accounting Chapter 2 Flashcards

Questions and Answers

Which of the following accounts would be considered an asset? (Check all that apply)

Accounts receivable (correct)

Cash (correct)

Accounts payable

Building (correct)

Supplies (correct)

Common Stock

Which of the following would be considered a source document in an accounting system? (Check all that apply)

Employee speeding ticket

Payroll records (correct)

Sales receipt (correct)

Purchase order (correct)

Checks (correct)

From the lists of items below, choose the one which includes only items that would be defined as cash.

Coins, checks, money orders (correct)

Checks, coins, accounts payable

Coins, accounts receivables, checks

Checks, money orders, supplies

The correct definition of an 'account' includes which of the following?

A record of increases and decreases in a specific asset, liability, equity, revenue, or expense item Signup and view all the answers

Which is (are) true regarding notes receivable? (Check all that apply)

Another name for a note receivable is a promissory note. Signup and view all the answers

The general ledger can be used to determine which of the following? (Select all answers which apply)

Common and unique accounts used by a business. Signup and view all the answers

Select the statement below that best defines prepaid accounts.

Prepaid accounts are assets that represent prepayments of future expenses. Signup and view all the answers

Assets are claims (by creditors) against the company.

False Signup and view all the answers

Supplies are _ until they are used. When they are used up, their costs are reported as _.

assets; expenses Signup and view all the answers

Identify which of the following lists include only examples of assets:

Building, cash, accounts receivable Signup and view all the answers

Which of the following items would be considered 'cash' and reflected in a company's Cash account? (Check all that apply)

Money orders Signup and view all the answers

Notes receivable is considered a(n) _____

asset Signup and view all the answers

Prepaid accounts are _ that represent prepayments of future expenses and are increased with a _.

assets; debit Signup and view all the answers

Which of the following statements are accurate regarding supplies? (Check all that apply)

Supplies are assets until they are used. Signup and view all the answers

Study Notes

Asset Accounts

Assets include items such as supplies, accounts receivable, cash, and buildings.
Accounts payable and common stock are not classified as assets.

Source Documents in Accounting

Source documents include payroll records, checks, purchase orders, and sales receipts.
Employee speeding tickets are not considered valid source documents.

Definition of Cash

Cash encompasses coins, checks, and money orders.
Accounts payable and supplies do not qualify as cash.

Definition of an Account

An account represents a record of increases and decreases in specific items such as assets, liabilities, and expenses.

Notes Receivable

Also known as a promissory note, notes receivable is classified as an asset.
Represents a promise for future payment from another entity.

General Ledger Usage

The general ledger provides a complete record of transactions in each account.
It tracks increases and decreases across all accounts and their balances at any point in time.

Prepaid Accounts

Considered assets, prepaid accounts represent payments for future expenses.
They increase with a debit entry.

Misconceptions about Assets

Assets are not claims against the company by creditors; that description pertains to liabilities.

Supplies Accounting

Supplies are initially recorded as assets and are categorized as expenses once used.
Unused supplies can be categorized into different types like store or office supplies.

Classification of Cash

Only checks, money orders, and coins are recorded in a company's Cash account.
Prepaid insurance and notes receivable are not counted as cash.

Classification of Notes Receivable

Notes receivable is classified as an asset.

Interrelation of Prepaid Accounts and Expenses

Both prepaid accounts and expenses are associated with future costs, with prepaid accounts requiring a debit for increases.

Characteristics of Supplies

Supplies are treated as assets upon purchase and can be recorded under various categories.
They remain assets until consumed and should not be treated as liabilities.

Description

Test your knowledge on business transactions in accounting with these flashcards from Chapter 2. Explore key concepts such as asset accounts and source documents to enhance your understanding of accounting fundamentals.