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Business LibreTexts

2.15: Questions

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  • ➢     Describe the steps in recording and posting the effects of a business transaction.

    ➢     Give some examples of source documents.

    ➢     Define an account. What are the two basic forms (styles) of accounts illustrated in the chapter?

    ➢     What is meant by the term double-entry procedure, or duality?

    ➢     Describe how you would determine the balance of a T-account.

    ➢     Define debit and credit. Name the types of accounts that are:

    ➢     Increased by a debit.

    ➢     Decreased by a debit.

    ➢     Increased by a credit.

    ➢     Decreased by a credit.

    ➢     Do you think this system makes sense? Can you conceive of other possible methods for recording changes in accounts?

    ➢     Which of the steps in the accounting cycle are performed throughout the accounting period?

    ➢     Which of the steps in the accounting cycle are performed only at the end of the accounting period?

    ➢     Why are expense and revenue accounts used when all revenues and expenses could be shown directly in the Retained Earnings account?

    ➢     What is the purpose of the Dividends account and how is it increased?

    ➢     Are the following possibilities conceivable in an entry involving only one debit and one credit? Why?

    ➢     Increase a liability and increase an expense.

    ➢     Increase an asset and decrease a liability.

    ➢     Increase a revenue and decrease an expense.

    ➢     Decrease an asset and increase another asset.

    ➢     Decrease an asset and increase a liability.

    ➢     Decrease a revenue and decrease an asset.

    ➢     Decrease a liability and increase a revenue.

    ➢     Describe the nature and purposes of the general journal. What does journalizing mean? Give an example of a compound entry in the general journal.

    ➢     Describe a ledger and a chart of accounts. How do these two compare with a book and its table of contents?

    ➢     Describe the act of posting. What difficulties could arise if no cross-indexing existed between the general journal and the ledger accounts?

    ➢     Which of the following cash payments would involve the immediate recording of an expense? Why?

    ➢     Paid vendors for office supplies previously purchased on account.

    ➢     Paid an automobile dealer for a new company auto.

    ➢     Paid the current month's rent.

    ➢     Paid salaries for the last half of the current month.

    ➢     What types of accounts appear in the unadjusted trial balance? What are the purposes of this trial balance?

    ➢     You have found that the total of the Debits column of the trial balance of Burns Company is USD 200,000, while the total of the Credits column is USD 180,000. What are some possible causes of this difference? If the difference between the columns is divisible by 9, what types of errors are possible?

    ➢     Store equipment was purchased for USD 2,000. Instead of debiting the Store Equipment account, the debit was made to Delivery Equipment. Of what help will the trial balance be in locating this error? Why?

    ➢     A student remembered that the side toward the window in the classroom was the debit side of an account. The student took an examination in a room where the windows were on the other side of the room and became confused and consistently reversed debits and credits. Would the student's trial balance have equal debit and credit totals? If there were no existing balances in any of the accounts to begin with, would the error prevent the student from preparing correct financial statements? Why?