ACCT Chapter 2 Overview Quiz
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Questions and Answers

Which of the following accounts is an asset? (Select all that apply)

  • Supplies Expense
  • Accounts Payable
  • Prepaid Advertising (correct)
  • Dividends

Which of the following accounts is a liability? (Select all that apply)

  • Common Stock
  • Accounts Payable (correct)
  • Company Truck
  • Prepaid Advertising

Which of the following accounts is an equity? (Select all that apply)

  • Prepaid Advertising
  • Accounts Payable
  • Common Stock (correct)
  • Company Truck

Which of the following is a true statement about debits and credits? (Select all that apply)

<p>A credit is on the right side of an account. (B)</p> Signup and view all the answers

With double-entry accounting, each transaction requires:

<p>That the total debits will equal the total credits. (C), That at least two accounts are affected. (D)</p> Signup and view all the answers

Cash - __________

<p>Debit</p> Signup and view all the answers

Accounts Payable - __________

<p>Credit</p> Signup and view all the answers

Supplies - __________

<p>Debit</p> Signup and view all the answers

Accounts Receivable - __________

<p>Debit</p> Signup and view all the answers

Common Stock - __________

<p>Credit</p> Signup and view all the answers

Professional Fees Earned - __________

<p>Credit</p> Signup and view all the answers

Dividends - __________

<p>Debit</p> Signup and view all the answers

Salaries Expense - __________

<p>Debit</p> Signup and view all the answers

The process of recording transactions in a journal is called:

<p>Journalizing (B)</p> Signup and view all the answers

Which of the following statements is true?

<p>The trial balance is completed to ensure that debits and credits are equal in the General Ledger. (D)</p> Signup and view all the answers

Study Notes

Asset Accounts

  • Prepaid advertising is classified as an asset.
  • Other examples of assets include cash, accounts receivable, supplies, equipment, and land.

Liability Accounts

  • Accounts payable is classified as a liability.
  • Other types of liabilities include income tax payable, salaries payable, and unearned revenue.

Equity Accounts

  • Common stock is classified as an equity account.
  • Other components of equity include dividends, revenues, and expenses.

Debits and Credits

  • A credit appears on the right side of an account, while a debit appears on the left side.
  • Debits are used to increase assets, expenses, and dividend accounts.
  • Credits are used to increase liabilities, revenue, and common stock accounts.

Double-Entry Accounting

  • Each transaction must impact at least two accounts, ensuring that total debits equal total credits.
  • This principle guarantees that the accounting equation remains balanced.

Journalizing

  • The process of recording transactions in a journal is called journalizing.

Trial Balance

  • The trial balance is prepared to ensure that debits and credits are equal in the general ledger.
  • It acts as a tool to visualize the balance of accounts but is not a financial statement.
  • The trial balance does not calculate net income and is prepared before financial statements.

Increasing Accounts

  • To increase:
    • Cash: Debit
    • Accounts Payable: Credit
    • Supplies: Debit
    • Accounts Receivable: Debit

Additional Account Changes

  • To increase:
    • Common Stock: Credit
    • Professional Fees Earned: Credit
    • Dividends: Debit
    • Salaries Expense: Debit

These points encapsulate fundamental accounting concepts essential for understanding how transactions impact financial statements.

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Description

Test your knowledge of asset, liability, and equity accounts with this quiz based on Chapter 2 of your accounting course. Each question will challenge you to identify the correct category for various accounts. Perfect for review before exams!

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