CHAPTER 2 REVIEW

INSTRUCTIONS: Indicate the manner in which each of the increases or decreases in the accounts listed below would be recorded by placing a check mark in the debit column or the credit column at the right.

DEBIT

CREDIT

1.Account payable is decreased

2.Supplies is decreased

3.Cash is increased

4.Accounts Receivable is decreased

5.Wages Expense is increased

6.Cash is decreased

7.Susan Cook, Drawing is increased

8.Accounts Receivable is increased

9.Prepaid Insurance is increased

10.Supplies is increased

11.Susan Cook, Capital is increased

12.Accounts Payable is increased

13.Professional Fees is increased

14.Notes Payable is increased

15.Unearned Rent is increased

16.Notes Receivable is decreased

17.Land is increased

18.Equipment is decreased

19.Fees Earned is increased

20.Rent Expense is increased

INSTRUCTIONS: For Smith auto indicate the accounts to be debited and credited in recording the selected transactions described below by writing the name of the accounts underneath the transaction and indicate whether it is a debit or credit.

EXAMPLE: John Smith withdrew cash from the business

John Smith, Drawing X(Dr)

CashX(Cr)

1.Paid creditors on account.

2.Fees earned from customers on account.

3.Recorded supplies used for month.

4.Paid wages.

5.Purchased supplies for cash.

6.Received cash from customer on account.

7.Provided services for cash.

8.Purchased Land, paying one-third in cash and giving a note for the balance.

9.Paid insurance premiums for a three-year period.

10.Purchased supplies on account.

11.John Smith invested money from his personal account into the business.

12.Returned for credit supplies purchased on account.

13.Bought equipment on account.

14.Paid cash to an employee because he was underpaid on his last paycheck.

15.Received cash from selling supplies to an employee at cost.

16.Reimbursed a client cash because they made an overpayment on their account.

INSTRUCTIONS: For each account listed below, indicate the classification, and list the normal balance by placing an 'X' in the debit column or the credit column.

A.AssetsB. LiabilitiesC. Owner's EquityD. RevenueE. Expenses

ACCOUNTS

CLASSIFICATION

DEBIT

CREDIT

1.Cash

A

X

2.Accounts Receivable

3.Miscellaneous Expense

4.Accounts Payable

5.Sally Allen, Capital

6.Fees Earned

7.Supplies

8.Land

9.Prepaid Insurance

10.Sally Allen, Drawing

11.Wages Expense

12.Unearned Rent

13.Notes Payable

14.Insurance Expense

15.Taxes Payable

16.Unearned Revenue

17.Prepaid Rent

18.Equipment

19.Land

20.Sales (revenue)

VOCABULARY: Match the current term to the definition by placing the letter next to each definition.

A.Account

B.Assets

C.Chart of Accounts

D.Credits

E.Debits

F.Double-entry Accounting

G.Drawing

H.Expenses

I.Journal

J.Journalizing

K.Ledger

L.Liabilities

M.Owner's Equity

N.Posting

O.Revenues

P.Slide

Q.T account

R.Transposition

S.Trial Balance

T.Unearned Revenue

_______1.An accounting form that is used to record the increases and decreases in each financial statement.

_______2.A group of accounts for a business.

_______3.A list of the accounts in the ledger.

_______4.Resources that are owned by the business.

_______5.Debts owed to outsiders (creditors).

_______6.The owner's right to the assets of the business.

_______7.Increases in owner's equity as a result of selling services or products to customers.

_______8.Assets used up or services consumed in the process of generating revenues.

_______9.The simplest form of an account.

_______10.Amounts entered on the left side of an account.

_______11.Amounts entered on the right side of an account.

_______12.The initial record in which the effects of a transaction are recorded.

_______13.The process of recording a transaction in a journal.

_______14.A system of accounting for recording transactions, based on recording increases and decreases in accounts so that debits equal credits.

_______15.The account used to record amounts withdrawn by an owner of a proprietorship.

_______16.The process of transferring the debits and credits from the journal entries to the accounts.

_______17.The liability created by receiving revenue.

_______18.A summary listing of the titles and balances of accounts in the ledger.

_______19.An error in which the order of the digits is changed, such as writing $542 as $452 or $524.

_______20.An error in which the entire number is moved one or more spaces to the right or the left, such as writing $542.00 or $54.20 or $5,420.00