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ACCT 211 CH 1-3 QUESTIONS AND ANSWERS / LATEST
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ACCT 211 CH 1-3 QUESTIONS AND ANSWERS / LATEST
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ACCT 211 CH 1-3Steps in processing transactions - ANSWERS-1) identify transactions and source
documents
2) analyze transactions using the accounting equation
3) record journal entry
4) post entry to ledger
trial balance - ANSWERS-a list of accounts and their balances at a point in time
time period assumption - ANSWERS-presumes that an organization's activities can
be divided into specific time periods such as a month, a 3-month quarter, a 6-
month interval, or a year.
interim financial statements - ANSWERS-covering one, three, or six months of
activity
natural business year - ANSWERS-is when sales activities are at their lowest level
for the year
accrual basis accounting - ANSWERS-uses the adjusting process to recognize
revenues when earned and expenses when incurred (matched with revenues)
, cash basis accounting - ANSWERS-recognizes revenues when cash is received and
records expenses when cash is paid
expense recognition principle - ANSWERS-aims to record expenses in the same
accounting period as the revenues that are earned as a result of those expenses;
this is a major part of the adjusting process
adjusting entry - ANSWERS-made at the end of an accounting period to reflect a
transaction or event that is not yet recorded
plant assets - ANSWERS-refers to long term tangible assets used to produce and
sell produce and sell products and services
depreciation - ANSWERS-the process of allocating the costs of these assets over
their expected useful lives
straight-line depreciation - ANSWERS-allocates equal amounts of the asset's net
cost to depreciation during its useful life
contra account - ANSWERS-an account linked with another account, it has an
opposite normal balance, and it is reported as a subtraction from that other
account's balance
book value - ANSWERS-the difference between two balances is the cost of the
asset that has not yet been depreciated
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