Accounting - College Level - Chapter 2

What does posting mean in accounting?

• A. Entering transactions into the journal

• B. Copying data from the ledger to the journal

• C. Copying data from the journal to the ledger

• D. Creating financial statements

What is the definition of expense?

• A. The cost of operating a business; a decrease in stockholders' equity

• B. Revenue generated from sales

• C. The amount of money in the company's bank account

• D. The total assets of a business

What is the definition of debit?

• A. Right side of an account

• B. Decreases in an account

• C. Left side of an account

• D. Increases in stockholders' equity

What is the definition of trial balance?

• A. Lists all accounts with their balances

• B. Summarizes revenues and expenses

• C. Records daily transactions

• D. Identifies the cost of goods sold

What is the definition of equity?

• • A. Total liabilities

• • B. Assets + Expenses

• • C. Assets - Liabilities

• • D. Revenues - Expenses

What is the definition of net income?

• A. Assets - Liabilities

• • B. Revenues - Expenses

• • C. Total Equity

• • D. Gross profit - Operating expenses

What is the definition of receivable?

• • A. Always a liability

• • B. Always an asset

• • C. Represents money owed by customers

• • D. Represents money owed to suppliers

What does charts of accounts mean in accounting?

• • A. Lists a company's accounts and account numbers (no account balances in this item)

• • B. Summarizes financial performance

• • C. Records daily transactions

• • D. Presents a detailed analysis of cash flows

What does payable mean in accounting?

• • A. Represents money owed by customers

• • B. Always an asset

• • C. Represents money owed to suppliers

• • D. Always a liability

What is a journal in accounting?

• • A. Lists all accounts with their balances

• • B. Record of transactions

• • C. Summarizes revenues and expenses

• • D. Presents a detailed analysis of cash flows