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Chapter 2: Q10E (page 93)

Using accounting vocabulary

Match the accounting terms with the corresponding definitions.

. Posting 2. Account 3. Debit 4. Journal 5. Chart of accounts 6. Trial balance 7. Normal balance 8. Ledger 9. Credit 10. Compound journal entry a. A detailed record of all increases and decreases that have occurred in a particular asset, liability, or equity during a period b. The record holding all the accounts of a business, the changes in those accounts, and their balances c. A journal entry that is characterized by having multiple debits and/or multiple credits d. A record of transactions in date order e. Left side of a T-account f. Side of an account where increases are recorded g. Transferring amounts from the journal to the ledger h. Right side of a T-account i. A list of all accounts with their balances at a point in time j. A list of all accounts with their account numbers

Short Answer

Expert verified

Accounting is recording, reporting, and interpreting the financial transaction and all the accounting terms are matched with the relevant definitions are given in step 2.

Step by step solution

01

Definition of Accounting

Accounting is defined as the process of recording, reporting, and interpreting the financial transaction of the business that occurred during the period.

02

Matching the accounting terms with definitions

Accounting Terms

Definition

1 Posting

(G)

2 Account

(A)

3 Debit

(E)

4 Journal

(D)

5 Chart of accounts

(J)

6 Trial balance

(I)

7 Normal Balance

(F)

8 Ledger

(B)

9 Credit

(H)

10 Compound Journal Entry

(C)

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Most popular questions from this chapter

Question: E2-20 Analyzing transactions from T-accounts The first nine transactions of North-West Airplane Repair have been posted to the T-accounts. Provide an explanation for each of the nine transactions. Learning Objective 3 Total Debits $191,800 Cash (1) 370,000 (3) 260,000 (9) 21,000 360,000 (2) 1,200 (5) 1,500 (6) 3,900 (7) 7,000 (8) ASSETS Accounts Payable LIABILITIES EQUITY Retained Earnings Notes Payable Office Supplies Building Common Stock Contributed Capital Dividends Salaries Expense Property Tax Expense Service Revenue Rent Expense = + = + − + + − (4) 1,500 (2) 360,000 (5) 1,200 1,50 (4) 0 260,000 (3) 370,000 (1) (8) 7,000 21,000 (9) (7) 1,400 (7) 2,500 (6) 1,5

What does a ledger show? What’s the difference between a ledger and a chart of accounts?

Correcting errors in a trial balance

The trial balance of Love to Learn Child Caredoes not balance.

Account Title Debit Credit

Office Supplies 1,000

Cash 8,060

Accounts Receivable 8,700

Prepaid Insurance 1,700

Equipment 90,400

Accounts Payable 3,000

Notes Payable 45,000

Common Stock 54,000

Dividends 3,740

Service Revenue 16,300

Rent Expense 400

Salaries Expense 4,350

Total Balance \( 118,350 \) 118,300

The following errors are detected:

a. Cash is understated by \(1,800.

b. A \)3,800 debit to Accounts Receivable was posted as a credit.

c. A \(1,000 purchase of office supplies on account was neither journalized nor posted.

d. Equipment was incorrectly transferred from the ledger as \)90,400. It should have been transferred as \(82,500.

e. Salaries Expense is overstated by \)350.

f. A \(300 cash payment for advertising expense was neither journalized nor posted.

g. A \)160 cash dividend was incorrectly journalized as \(1,600.

h. Service Revenue was understated by \)4,000.

i. A 12-month insurance policy was posted as a $1,400 credit to Prepaid Insurance. Cash was posted correctly.

Prepare the corrected trial balance as of May 31, 2018. Journal entries are not required.

Journalizing transactions, posting journal entries to T-accounts, and preparing a trial balance

Beth Stewart started her practice as a design consultant on November 1, 2018. During the first month of operations, the business completed the following transactions:

Nov. 1 Received \(41,000 cash and issued common stock to Stewart.

4 Purchased office supplies, \)1,200, and furniture, \(2,300, on account.

6 Performed services for a law firm and received \)2,100 cash.

7 Paid \(27,000 cash to acquire land to be used in operations.

10 Performed services for a hotel and received its promise to pay the \)800 within one week.

14 Paid for the furniture purchased on November 4 on account.

15 Paid assistant’s semimonthly salary, \(1,470.

17 Received cash on account, \)500.

20 Prepared a design for a school on account, \(680.

25 Received \)1,900 cash for design services to be performed in December.

28 Received \(3,100 cash for consulting with Plummer & Gordon.

29 Paid \)840 cash for a 12-month insurance policy starting on December 1.

30 Paid assistant’s semimonthly salary, \(1,470. 30 Paid monthly rent expense, \)650.

30 Received a bill for utilities, \(650. The bill will be paid next month.

30 Paid cash dividends of \)2,800.b

Requirements 4. Prepare the trial balance of Beth Stewart, Designer, as of November 30, 2018.

Journalizing transactions, posting journal entries to four-column accounts, and preparing a trial balance

Theodore McMahon opened a law office on April 1, 2018. During the first month of operations, the business completed the following transactions:

Apr. 1 McMahon contributed \(70,000 cash to the business, Theodore McMahon, Attorney. The business issued common stock to McMahon.

3 Purchased office supplies, \)1,100, and furniture, \(1,300, on account.

4 Performed legal services for a client and received \)2,000 cash.

7 Purchased a building with a market value of \(150,000, and land with a market value of \)30,000. The business paid \(40,000 cash and signed a note payable to the bank for the remaining amount.

11 Prepared legal documents for a client on account, \)400.

15 Paid assistant’s semimonthly salary, \(1,200.

16 Paid for the office supplies purchased on April 3 on account. 18 Received \)2,700 cash for helping a client sell real estate.

19 Defended a client in court and billed the client for \(1,700.

25 Received a bill for utilities, \)650. The bill will be paid next month.

28 Received cash on account, \(1,100.

29 Paid \)3,600 cash for a 12-month insurance policy starting on May 1.

29 Paid assistant’s semimonthly salary, \(1,200.

30 Paid monthly rent expense, \)2,100.

30 Paid cash dividends of $3,200.

Requirements 1. Record each transaction in the journal, using the following account titles: Cash; Accounts Receivable; Office Supplies; Prepaid Insurance; Land; Building; Furniture; Accounts Payable; Utilities Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Salaries Expense; Rent Expense; and Utilities Expense. Explanations are not required.
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