5. Fill in the blanks below with the word debits or credits: Type of account Increased by Decreased by Asset Liability Stockholders’ equity Revenue Expense
6. A __________ __________ contains a listing of the ledger accounts and their debit or credit balances to determine that __________ equal __________ in the recording process.
7. Collectively, all of the accounts in the accounting system are referred to as the __________. The list of accounts in an accounting system (often together with their numbers) is called the __________ __________ __________.
8. The basic unit in which data are stored in an accounting system is called an __________. These storage units should be so constructed as to readily receive money measurements of the __________ or ___________ in the items for which they are established.
9. Whether or not an account is established is determined largely by whether or not it will provide __________ __________.
10. The difference between the amounts entered as increases in an account and those entered as decreases is called the __________ of the account.
11. Since revenues increase Retained Earnings, and increases in Retained Earnings are recorded on the __________ side of the account, it follows that increases in revenues are recorded on the __________ side of the account.
12. Since expenses decrease Retained Earnings and since decreases in Retained Earnings are recorded on the __________ side of the account, it follows that increases in expenses are recorded on the __________ side of the account.
13. The financial accounting process has been shown to consist of eight steps, namely: 1. 2. 3. 4. 5. 6. 7. 8.
14. A __________ is often called a book of original entry and contains a chronological record of the transactions of a business. Before a transaction can be entered in this book of original entry, its effects on the business must be determined and encoded in terms of __________ and __________.
15. The properties used by a business are known as __________; whereas the rights in the properties of a business are known as __________.
16. A sale made to a customer or client is recorded as an increase in a revenue account and an increase in an __________ account.
17. The total assets of the Miller Service Company are $22,000 and the total liabilities are $10,000. Therefore, the total stockholders’ equity is __________.
18. An entry on the left side of an account is known as a __________.
Referring to the items listed below, place the appropriate letter next to the corresponding description.
a. Accounting period
f. Book value
k. Fiscal year
b. Accrued asset
g. Calendar year
l. Prepaid expense
c. Accrual basis of accounting
h. Cash basis of accounting
m. Estimated salvage value
d. Accumulated depreciation
n. Unearned revenue
e. Adjusting entries
j. Earned revenue
o. Estimated useful life
1. A plant asset’s cost less its accumulated depreciation.
2. A period that begins on January 1 and ends on December 31.
3. Contra asset account.
4. An asset that will be assigned to expense at a later date.
5. A time period into which an entity’s life is arbitrarily divided for financial reporting purposes.
6. Made at the end of an accounting period to reflect economic activity that has taken place but has not yet been recorded.
7. Recognizes revenues when cash is received and recognizes expenses when cash is paid out.
8. An asset that exists at the end of an accounting period but has not yet been recorded.
9. The expense resulting from a plant equipemnt’s expiration of usefulness.
10. The estimated number of time periods that a company expects to make use of a plant asset.
11. A period of any twelve consecutive months used as an accounting period.
12. Cash received in advance for goods and services to be delivered at a later date.