Questions and Answers
Which of the following accounts is an asset? (Select all that apply)
Which of the following accounts is a liability? (Select all that apply)
Which of the following accounts is an equity? (Select all that apply)
Which of the following is a true statement about debits and credits? (Select all that apply)
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With double-entry accounting, each transaction requires:
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Cash - __________
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Accounts Payable - __________
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Supplies - __________
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Accounts Receivable - __________
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Common Stock - __________
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Professional Fees Earned - __________
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Dividends - __________
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Salaries Expense - __________
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The process of recording transactions in a journal is called:
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Which of the following statements is true?
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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!
