Ch3 Review

What is the first step in the Accounting Cycle?

• Post

• Journalize

• Analyze Business Transactions

• Trial Balance

What is the second step in the Accounting Cycle?

• Prepare financial statements
• Journalize the transactions
• Post to the ledger
• Analyze business transactions

What is the third step in the Accounting Cycle?

• Preparing an adjusted trial balance
• Posting to the ledger
• Preparing financial statements
• Journalizing and posting closing entries

What is the fourth step in the Accounting Cycle?

• Prepare financial statements
• Post to the ledger
• Prepare a trial balance
• Analyze and record transactions

Which statement about an account is true?

• 1. An account consists of a title, a debit side, and a ledger side.

• 1. An account is an individual accounting record of increases and decreases in specific asset, liability, and stockholders’ equity items.

• There are separate accounts for specific assets and liabilities but only one account for stockholders’ equity items.

• The left side of an account is the credit, or decrease, side.

Debits:

• 1. increase both assets and liabilities.

• 1. decrease both assets and liabilities.

• 1. increase assets and decrease liabilities.

• 1. decrease assets and increase liabilities.

A revenue account:

• 1. is increased by debits.

• 1. is decreased by credits.

• 1. has a normal balance of a debit.

• 1. is increased by credits.

Which accounts normally have debit balances?

• 1. Assets, expenses, and revenues.

• 1. Assets, expenses, and retained earnings.

• 1. Assets, liabilities, and dividends.

• 1. Assets, dividends, and expenses.

Paying an account payable with cash affects the components of the accounting

equation in the following way:

• a. Decreases stockholders’ equity and decreases liabilities.

• b. Increases assets and decreases liabilities.
  

• c. Decreases assets and increases stockholders’ equity.
  

• d. Decreases assets and decreases liabilities.

Which of these statements about a journal is false?

• 1. It contains only revenue and expense accounts.

• 1. It provides a chronological record of transactions.

• 1. It helps to locate errors because the debit and credit amounts for each entry can

• 1. It discloses in one place the complete effect of a transaction.