Financial Accounting 2
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Questions and Answers

What is the main objective of this textbook?

  • To introduce students to entrepreneurship
  • To learn about investment strategies
  • To understand the basics of marketing
  • To understand financial accounting in business (correct)

    • What is net income?

  • A decrease in owner's equity
  • A type of investment strategy
  • A type of business entity
  • An increase in owner's equity resulting from profitable business operations (correct)

    • What is the term for a decrease in owner's equity?

  • Net loss (correct)
  • Investment
  • Profit
  • Net income

    • Why do people invest in a company's capital stock?

    <p>To earn a profit which will increase the value of their investments</p> Signup and view all the answers

    What is the general meaning of income?

    <p>The reward or payment received in exchange for the production of goods and services</p> Signup and view all the answers

    What is the topic of Chapter One of this textbook?

    <p>Measuring Business Income</p> Signup and view all the answers

    What is the main purpose of the second issue of this textbook?

    <p>To cover accounting issues related to commercial and industrial enterprises</p> Signup and view all the answers

    What is the primary reason for splitting the textbook into two issues?

    <p>To recognize the varying levels of students' knowledge</p> Signup and view all the answers

    What is the focus of the first issue of this textbook?

    <p>The accounting cycle and its environment</p> Signup and view all the answers

    Who is the author of this textbook?

    <p>Dr. Ali Abdelkarim Rawy</p> Signup and view all the answers

    To whom is this textbook dedicated?

    <p>The author's father, mother, wife, and children</p> Signup and view all the answers

    What is the academic institution where the author obtained his Ph.D. in Accounting?

    <p>Hull University-England</p> Signup and view all the answers

    What is the effect of the expense on the owner's equity?

    <p>It decreases the owner's equity</p> Signup and view all the answers

    What type of account is Advertising Expense?

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

    How is the decrease in the asset Cash recorded?

    <p>By crediting Cash Account</p> Signup and view all the answers

    What is the journal entry for the transaction on December 1?

    <p>Debit Advertising Expense a/c L.E.1,800, Credit Cash a/c L.E.1,800</p> Signup and view all the answers

    What is the effect of the transaction on December 2 on the liability Accounts Payable?

    <p>It increases the liability Accounts Payable</p> Signup and view all the answers

    What is the journal entry for the transaction on December 2?

    <p>Debit Advertising Expense a/c L.E.2,350, Credit Accounts Payable L.E.2,350</p> Signup and view all the answers

    What is the total debit balance in the Cash a/c as of December 31, 2021?

    <p>108900</p> Signup and view all the answers

    What is the balance in the Accounts Receivable a/c as of December 31, 2021?

    <p>33000</p> Signup and view all the answers

    What is the balance in the Land a/c as of December 31, 2021?

    <p>60000</p> Signup and view all the answers

    What is the total credit balance in the Notes Payable a/c as of December 31, 2021?

    <p>150000</p> Signup and view all the answers

    What is the balance in the Building a/c as of December 31, 2021?

    <p>180000</p> Signup and view all the answers

    What is the balance in the Tools and Equipment a/c as of December 31, 2021?

    <p>7000</p> Signup and view all the answers

    What happens to owner's equity when revenue is recorded?

    <p>It increases</p> Signup and view all the answers

    How are expenses recorded?

    <p>By debits</p> Signup and view all the answers

    What is the purpose of maintaining a separate ledger account for each major type of revenue and expense?

    <p>To classify and summarize transactions</p> Signup and view all the answers

    What happens to the debit balances of expense accounts at the end of the period?

    <p>They are listed in the income statement</p> Signup and view all the answers

    How are investments of assets in the business entity by the owner recorded?

    <p>By debiting the asset accounts and crediting the owner's capital account</p> Signup and view all the answers

    What is the nature of investments and withdrawals by the owner?

    <p>They are not considered revenue or expenses of the business</p> Signup and view all the answers

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