2.1 Questions - Financial Accounting, 3e (Kemp/Waybright) Chapt...

1 Copyright © 2015 Pearson Education, Inc.Financial Accounting, 3e (Kemp/Waybright) Chapter 2 Analyzing and Recording Business Transactions

2.1 Questions

1) Account titles such as Marketing Expense and Depreciation Expense would be numbered starting with a 3.

Answer: FALSE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

2) A listing of all accounts in numerical order is called a chart of accounts.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

3) An account numbered 321 would be considered a Stockholders' Equity account as it begins with a 3.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-4

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

4) The Stockholders' Equity section would include accounts such as Retained Earnings and Revenues.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Reporting

Financial Accounting 3rd Edition Kemp Test Bank Visit TestBankDeal.com to get complete for all chapters

2 Copyright © 2015 Pearson Education, Inc.5) Items of value that a company owns are called Stockholders' Equity.

Answer: FALSE

Diff: 1

LO: 2-1

EOC Ref: Vocabulary

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

6) A business generally has fewer liability accounts than asset accounts.

Answer: TRUE

Diff: 1

LO: 2-1

EOC Ref: S2-1

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

7) A business generally has just one expense account.

Answer: FALSE

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

8) Obligations that are owed to others due to past transactions are categorized as:

• Stockholders' Equity.
• expenses.
• assets.
• liabilities.

Answer: D

Diff: 1

LO: 2-1

EOC Ref: Vocabulary

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

3 Copyright © 2015 Pearson Education, Inc.9) Monies owed to a company on a written promise to pay a fixed amount of money by a certain

date would be called a(n):

• note payable.
• note receivable.
• account payable.
• account receivable.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

10) Items such as salaries and interest that have been incurred, but not yet paid, are called:

• accrued assets.
• accrued liabilities.
• accrued revenues.
• accrued notes.

Answer: B

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

11) The order in which accounts appear in the chart of accounts is:

• liabilities, assets, revenues, Stockholders' Equity, expenses.
• Stockholders' Equity, expenses, revenue, liabilities, assets.
• assets, Stockholders' Equity, revenues, expenses, liabilities.
• Assets, Liabilities, Stockholders' Equity, revenues, expenses.

Answer: D

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting

4 Copyright © 2015 Pearson Education, Inc.

12) An account starting with a number 1 would indicate:

• an asset.
• Stockholders' Equity.
• a revenue.
• a liability.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting

13) All payables are listed as:

• assets.
• liabilities.
• Stockholders' Equity.
• revenue.

Answer: B

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Reflective Thinking (Able to understand oneself in the context of society)

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Decision Modeling

14) Accounts that start with the numbers 6-9 would probably be:

• other revenues and expenses.
• other assets and liabilities.
• other Stockholders' Equity.
• other assets and revenues.

Answer: A

Diff: 1

LO: 2-1

EOC Ref: S2-2

AACSB: Analytical Thinking

AICPA Business: Strategic/Critical Thinking

AICPA Functional: Measurement and Reporting