Chapter 2

Question 1

Assets and Liabilities

Answer 1

Debits: increase assets and decrease liability
Credits: decrease assets and increase liability

Question 2

Revenues and Expenses

Answer 2

Debits: decrease revenues and increase expenses
Credits: increase revenues and decrease expenses

Question 3

Assets

Answer 3

+DR, -CR

Question 4

Liabilities

Answer 4

+CR, -DR

Question 5

Capital Account

Answer 5

+CR, -DR

Question 6

Draws

Answer 6

+DR, -CR

Question 7

Revenues

Answer 7

+CR, -DR

Question 8

Expenses

Answer 8

+DR, -CR

Question 9

Steps to Record a Transaction

Answer 9

1. Analyze the transaction: decide what to DR and CR.
2. Enter the DR and CR in the JOURNAL.
3. Transfer the entry in the journal to the individual accounts in the LEDGER.

Question 10

Transaction Step 1

Answer 10

1. What accounts are involved?
2. What kind of accounts are these?
3. Am I increasing or decreasing these accounts?
4. Now apply rules of DR and CR

Question 11

Journal

Answer 11

A chronological listing of each transaction.

Question 12

Ledger

Answer 12

A group of accounts.

Question 13

Chart of Accounts

Answer 13

Listing of all accounts with their acct #s

Question 14

The Trial Balance

Answer 14

Listing of all accounts according to their DR & CR balances.
DR should = CR

Question 15

All “Unearneds”

Answer 15

Liabilities

Question 16

All “Prepaids”

Answer 16

Assets