ACC 556 WEEK 2 Chapter 3 Exercise
Chapter 3 Exercise: The Accounting Information System
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Salaries and wages payable is a type of expense.
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Are advanced receipts from customers treated as revenue at the time of receipt? Why or why not?
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Yes, they are treated as revenue at the time of receipt because the company has access to the cash.
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No, the amount of revenue cannot be adequately determined until the company completes the work.
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Yes, The intent of the company is to perform the work and the customer is confident that the services will be completed.
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No, revenue cannot be recognized until the work is performed.
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An account is often referred to as a T-account because of the way it is constructed.
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The primary purpose of the trial balance is to
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disclose the complete effect of a transaction in one place.
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make sure a journal entry is not posted twice.
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transfer journal entries to the ledger accounts.
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prove the equality of the debit and credit amounts after posting.
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All of the following are characteristics of every accounting information system except it is a system
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that collects transaction data.
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that processes transaction data.
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that communicates financial information to decision makers.
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of data storage hardware for the chart of accounts.
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Revenues are a subdivision of stockholders’ equity.
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1 out of 1 points
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On June 1, 2014, England Inc. reported a cash balance of $21,000. During June, England made deposits of $8,000 and made disbursements totaling $24,000. What is the cash balance at the end of June?
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$5,000 credit balance
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$29,000 debit balance
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$5,000 debit balance
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$3,000 credit balance
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Economic events that require recording in the financial statements are called accounting transactions.
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Which of the following statements is not true?
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Expenses increase stockholders’ equity.
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Expenses have normal debit balances.
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Expenses decrease stockholders’ equity.
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Expenses are a negative factor in the computation of net income.
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All of the following statements regarding the double-entry system are true except
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a two-sided effect of each transaction is recorded in appropriate accounts when using the double-entry system.
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the double-entry system provides a logical method for recording transactions.
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both sides of the accounting equation must be affected when recording a transaction using the double-entry system.
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when using the double-entry system, the sum of all debits to the accounts must equal the sum of all credits.
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If total liabilities decreased by $4,000, then
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stockholders’ equity must have decreased by $4,000.
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assets must have decreased by $4,000, or stockholders’ equity must have increased by $4,000.
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assets and stockholders’ equity each increased by $2,000.
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assets must have increased by $4,000.
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The purpose of the ledger is to
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record chronologically the day’s transactions.
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keep a record of documentation to support each transaction.
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keep in one place all information about changes in specific account balances.
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make sure that all assets, liabilities, etc., have normal balances at all times.
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An expense
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decreases assets and liabilities.
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decreases stockholders’ equity.
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leaves stockholders’ equity unchanged.
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is basically the same as a liability.
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Borrowing money and issuing shares of stock are
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operating activities.
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investing activities.
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financing activities.
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None of these answer choices are correct.
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Match the items below by entering the appropriate code letter in the space provided.
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Question
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Selected Match
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Account
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An accounting record of increases and decreases in specific assets, liabilities, and stockholders’ equity items.
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Normal account balance
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Shows the debit and credit effects of specific transactions.
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Debit
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Left side of an account.
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Revenue account
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Has a credit normal balance
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Ledger
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A list of accounts and their balances at a given time.
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Journal
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The entire group of accounts maintained by a company.
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Posting
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Transferring journal entries to ledger accounts.
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Chart of accounts
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A list of all the accounts used by a company.
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Trial balance
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A list of accounts and their balances at a given time.
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Source document
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Evidence that a transaction has taken place.
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All Answer Choices
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A.
Transferring journal entries to ledger accounts.
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B.
A list of accounts and their balances at a given time.
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C.
Left side of an account.
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The side which increases an account.
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An accounting record of increases and decreases in specific assets, liabilities, and stockholders’ equity items.
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F.
Evidence that a transaction has taken place.
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G.
Shows the debit and credit effects of specific transactions.
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H.
A list of all the accounts used by a company.
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I.
The entire group of accounts maintained by a company.
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J.
Has a credit normal balance
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Operating activities are the types of activities the company performs to generate profits.
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Which of the following is not an example of a source document that provides evidence of a transaction?
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A cancelled check
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A sales slip
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A trial balance
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A cash register tape
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Which one of the following represents the expanded basic accounting equation?
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Assets = Liabilities + Common Stock + Dividends – Revenue – Expenses
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Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues
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Assets= Liabilities + Common Stock + Revenues – Expenses - Dividends
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Assets = Revenues + Expenses – Liabilities
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