chapter_2 - CHAPTER 2 The Recording Process ANSWERS TO...

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Unformatted text preview: CHAPTER 2 The Recording Process ANSWERS TO QUESTIONS 1. A T account has the following parts: (a) the title, (b) the left or debit side, and (c) the right or credit side. 2. Disagree. The terms debit and credit mean left and right respectively. 3. Jeff is incorrect. The double-entry system merely records the dual effect of a transaction on the accounting equation. A transaction is not recorded twice; it is recorded once, with a dual effect. 4. Maria is incorrect. A debit balance only means that debit amounts exceed credit amounts in an account. Conversely, a credit balance only means that credit amounts are greater than debit amounts in an account. Thus, a debit or credit balance is neither favorable nor unfavorable. 5. (a) Asset accounts are increased by debits and decreased by credits. (b) Liability accounts are decreased by debits and increased by credits. (c) Revenues and owners capital are increased by credits and decreased by debits. Expenses and owners drawing are increased by debits and decreased by credits. 6. (a) Accounts Receivabledebit balance. (b) Cashdebit balance. (c) Owners Drawingdebit balance. (d) Accounts Payablecredit balance. (e) Service Revenuecredit balance. (f) Salaries Expensedebit balance. (g) Owners Capitalcredit balance. 7. (a) Accounts Receivableassetdebit balance. (b) Accounts Payableliabilitycredit balance (c) Equipmentassetdebit balance. (d) Owners Drawingowners equitydebit balance. (e) Suppliesassetdebit balance. 8. (a) Debit Supplies and credit Accounts Payable. (b) Debit Cash and credit Notes Payable. (c) Debit Salaries Expense and credit Cash. 9. (1) Cashboth debit and credit entries. (2) Accounts Receivableboth debit and credit entries. (3) Owners Drawingdebit entries only. (4) Accounts Payableboth debit and credit entries. (5) Salaries Expensedebit entries only. (6) Service Revenuecredit entries only. 10. The basic steps in the recording process are: (1) Analyze each transaction for its effect on the accounts. 2-1 (2) Enter the transaction information in a journal. (3) Transfer the journal information to the appropriate accounts in the ledger. 2-2 Questions Chapter 2 (Continued) 11. The advantages of using the journal in the recording process are: (1) It discloses in one place the complete effects of a transaction. (2) It provides a chronological record of all transactions. (3) It helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared. 12. (a) The debit should be entered first. (b) The credit should be indented. 13. When three or more accounts are required in one journal entry, the entry is referred to as a compound entry. An example of a compound entry is the purchase of equipment, part of which is paid for with cash and the remainder is on account....
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chapter_2 - CHAPTER 2 The Recording Process ANSWERS TO...

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