2014 Pearson Canada Inc.

1 © 2014 Pearson Canada Inc.Accounting, Vol. 1, 9e Cdn. Ed. (Horngren et al.) Chapter 2 Recording Business Transactions Objective 2-1 1) The basic summary device of accounting is the account.

Answer: TRUE

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

2) Notes receivable is a liability account.

Answer: FALSE

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

3) A chart of accounts is a list of all of a company's accounts with their account numbers.

Answer: TRUE

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

4) A chart of accounts is organized in order of the accounting equation, with assets first, followed by liabilities and owner's equity.

Answer: TRUE

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

5) The ledger is the first book of entry for a business transaction.

Answer: FALSE

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

6) An account receivable for the selling company is an account payable for the purchasing company.

Answer: TRUE

Diff: 2

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Comprehension

Objective: 2-1 Define and use key accounting terms

Accounting Volume 1 Canadian 9th Edition Horngren Test Bank Visit TestBankDeal.com to get complete for all chapters

2 © 2014 Pearson Canada Inc.

7) The basic summary device of accounting is the:

• ledger.
• account.
• debit.
• credit.

Answer: B

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

8) Accounts are grouped in a book called the:

• trial balance.
• chart of accounts.
• journal.
• ledger.

Answer: D

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

9) All of the following are assets except:

• cash.
• accounts receivable.
• land.
• accounts payable.

Answer: D

Diff: 2

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

10) An organization's list of all its accounts and the related account numbers is called a:

• balance sheet.
• chart of accounts.
• ledger.
• trial balance.

Answer: B

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

3 © 2014 Pearson Canada Inc.

11) A chart of accounts is:

• a source document.
• another name for a trial balance.
• a list of all of the accounts of an organization and their related account numbers.
• prepared as the last step in analyzing transactions.

Answer: C

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

12) Which of the following is a revenue account?

• accounts receivable
• accumulated amortization
• unearned revenue
• sales

Answer: D

Diff: 2

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Comprehension

Objective: 2-1 Define and use key accounting terms

13) Which of the following most completely describes businesses that use a chart of accounts?

• service but not merchandising or manufacturing businesses
• merchandising but not service or manufacturing businesses
• manufacturing but not service or merchandising businesses
• Service, merchandising, and manufacturing businesses all use a chart of accounts.

Answer: D

Diff: 2

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

14) The year end balance in the capital account is determined by:

• the change in cash from the beginning to the end of the year.
• the beginning capital balance, investments, net income or loss, and withdrawals.
• only investments and withdrawals.
• the change in total assets from the beginning to the end of the year.

Answer: B

Diff: 3

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Comprehension

Objective: 2-1 Define and use key accounting terms

4 © 2014 Pearson Canada Inc.Match the following.

• account
• ledger
• journal
• chart of accounts

15) The basic summary device of accounting

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

16) The book of accounts

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

17) The chronological record of an entity's transactions

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

18) A list of all an entity's accounts and their account numbers

Diff: 1

Learning Outcome: A-03 Analyze and record transactions and their effects on the financial statements

Skill: Knowledge

Objective: 2-1 Define and use key accounting terms

Answers: 15) A 16) B 17) C 18) D