Test bank cho Accounting Principles 12th Edition Weygandt – Chương 2: The Recording Process

A new account is opened for each transaction entered into by a business firm.

The recording process becomes more efficient and informative if all transactions are recorded in one account.

When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.

An account is often referred to as a T-account because of the way it is constructed.

A debit to an account indicates an increase in that account.

If a revenue account is credited, the revenue account is increased.

The normal balance of all accounts is a debit.

Debit and credit can be interpreted to mean increase and decrease, respectively.

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

A credit balance in a liability account indicates that an error in recording has occurred.

The drawing account is a subdivision of the owner's capital account and appears as an expense on the income statement.

Revenues are a subdivision of owner's capital.

Under the double-entry system, revenues must always equal expenses.

Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.

Business documents can provide evidence that a transaction has occurred.

Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.

Transactions are entered in the ledger accounts and then transferred to journals.

All business transactions must be entered first in the general ledger.

A simple journal entry requires only one debit to an account and one credit to an account.

A compound journal entry requires several debits to one account and several credits to one account.

Transactions are recorded in alphabetic order in a journal.

A journal is also known as a book of original entry.

The complete effect of a transaction on the accounts is disclosed in the journal.

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

The chart of accounts is a special ledger used in accounting systems.

A general ledger should be arranged in the order in which accounts are presented in the financial statements, beginning with the balance sheet accounts.

The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises.

Posting is the process of proving the equality of debits and credits in the trial balance.

After a transaction has been posted, the reference column in the journal should not be blank.

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

The double-entry system is a logical method for recording transactions and results in equal amounts for debits and credits for each transaction.

The normal balance of an expense is a credit.

The journal provides a chronological record of transactions.

The ledger is merely a bookkeeping device and therefore does not provide much useful data for management.

The chart of accounts is a listing of the accounts and the account numbers which identify their location in the ledger.

The primary purpose of a trial balance is to prove the mathematical equality of the debits and credits after posting.

The trial balance will not balance when incorrect account titles are used in journalizing or posting.

An account consists of

The left side of an account is

Which one of the following is not a part of an account?

An account is a part of the financial information system and is described by all except which one of the following?

The right side of an account

An account consists of

A T-account is

Credits

A debit to an asset account indicates

The normal balance of any account is the

The double-entry system requires that each transaction must be recorded

A credit is not the normal balance for which account listed below?

Which one of the following could represent the expanded basic accounting equation?

Which of the following correctly identifies normal balances of accounts?

The best interpretation of the word credit is the

In recording an accounting transaction in a double-entry system

Debits

A debit is not the normal balance for which account listed below?

An accountant has debited an asset account for $1,400 and credited a liability account for $500. What can be done to complete the recording of the transaction?

An accountant has debited an asset account for $1,300 and credited a liability account for $600. Which of the following would be an incorrect way to complete the recording of the transaction?

Which of the following is not true of the terms debit and credit?

An account will have a credit balance if the

For the basic accounting equation to stay in balance, each transaction recorded must

Which of the following statements is true?

Assets normally show

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

If a company has overdrawn its bank balance, then

Which account below is not a subdivision of owner's equity?

When an owner makes a withdrawal

The owner's drawings account

Which of the following statements is not true?

A credit to a liability account

In the first month of operations, the total of the debit entries to the cash account amounted to $1,400 and the total of the credit entries to the cash account amounted to $800. The cash account has a(n)

Phast Mail Service purchased equipment for $2,000. Phast paid $500 in cash and signed a note for the balance. Phast debited the Equipment account, credited Cash and

Madrid Industries purchased supplies for $1,200. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for 700. Which of the following would be the correct way to complete the recording of the transaction?

On January 14, Maxine Industries purchased supplies of $900 on account. The entry to record the purchase will include

On June 1, 2016, Barcelona Inc. reported a cash balance of $11,000. During June, Barcelona made deposits of $3,000 and made disbursements totalling $9,000. What is the cash balance at the end of June?

At January 1, 2016, Croc Industries reported owner's capital of $140,000. During 2016, Croc had a net loss of $30,000 and owner drawings of $15,000. At December 31, 2016, the amount of owner's capital is

Boise Co. pays its employees twice a month, on the 7th and the 21st. On June 21, Boise Co. paid employee salaries of $6,000. This transaction would

In the first month of operations for Pendleton Industries, the total of the debit entries to the cash account amounted to $33,000 ($13,000 investment by the owner and revenues of 21,000 (purchase of equipment $8,000 and payment of expenses $13,000). At the end of the month, the cash account has a(n)

Qwik Company showed the following balances at the end of its first year:

What did Qwik Company show as total credits on its trial balance?

Bertoli Company showed the following balances at the end of its first year:

What did Bertoli Company show as total credits on its trial balance?

During February 2016, its first month of operations, the owner of Solcist Co. invested cash of $50,000. Solcist had cash revenues of $16,000 and paid expenses of $21,000. Assuming no other transactions impacted the cash account, what is the balance in Cash at February 29?

At January 31, 2016, the balance in Bigelow Inc.'s supplies account was $780. During February, Bigelow purchased supplies of $900 and used supplies of $1,150. At the end of February, the balance in the supplies account should be

At December 1, 2016, Dubois Company's accounts receivable balance was $1,300. During December, Dubois had credit sales of $7,400 and collected accounts receivable of $6,000. At December 31, 2016, the accounts receivable balance is

At October 1, 2016, Medina Co. had an accounts payable balance of $50,000. During the month, the company made purchases on account of $35,000 and made payments on account of $48,000. At October 31, 2016, the accounts payable balance is

During 2016, its first year of operations, Aida's Bakery had revenues of $65,000 and expenses of $35,000. The business had owner's drawings of $22,000. What is the amount of owner's equity at December 31, 2016?

On July 7, 2016, Rancho Realty Co. performed cash services of $1,900. The entry to record this transaction would include

At September 1, 2016, Hotel Suites Co. reported owner's capital of $147,000. During the month, Hotel Suites generated revenues of $48,000, incurred expenses of $26,000, purchased equipment for $5,000 and withdrew cash of $3,000. What is the amount of owner's capital at September 30, 2016?

The final step in the recording process is to

The usual sequence of steps in the transaction recording process is:

In recording business transactions, evidence that an accounting transaction has taken place is obtained from

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

The first step in the recording process is to

Evidence that would not help with determining the effects of a transaction on the accounts would be a(n)

After transaction information has been recorded in the journal, it is transferred to the

The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the

The final step in the recording process is to transfer the journal information to the

The recording process occurs

A compound journal entry involves

A journal provides

When three or more accounts are required in one journal entry, the entry is referred to as a

When two accounts are required in one journal entry, the entry is referred to as a

Another name for a journal is

The standard format of a journal would not include

Transactions in a journal are initially recorded in

A journal is not useful for

A complete journal entry does not show

The name given to entering transaction data in the journal is

The standard form of a journal entry has the

When journalizing, the reference column is

On June 1, 2016 Ben Casey buys a copier machine for his business and finances this purchase with cash and a note. When journalizing this transaction, he will

Which of the following journal entries is recorded correctly and in the standard format?

The ledger should be arranged in

The entire group of accounts maintained by a company is called the

An accounting record of the balances of all assets, liabilities, and owner's equity accounts is called a

The usual ordering of accounts in the general ledger is

Management could determine the amounts due from customers by examining which ledger account?

The ledger accounts should be arranged in

A three column form of account is so named because it has columns for

On August 13, 2016, Accounting Services Co. purchased office equipment for $1,700 and office supplies of $300 on account. Which of the following journal entries is recorded correctly and in the standard format?

Able2 Company received a cash advance of $800 from a customer. As a result of this event,

Camper Van Company purchased equipment for $2,300 cash. As a result of this event,

Beethoven Company provided consulting services and billed the client $3,600. As a result of this event,

The first step in posting involves

A chart of accounts usually starts with

The procedure of transferring journal entries to the ledger accounts is called

A number in the reference column in a general journal indicates

A chart of accounts for a business firm

Posting

After journal entries are posted, the reference column

The explanation column of the general ledger

A numbering system for a chart of accounts

The first step in designing a computerized accounting system is the creation of the

The steps in preparing a trial balance include all of the following except

A trial balance may balance even when each of the following occurs except when

A list of accounts and their balances at a given time is called a(n)

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates

A trial balance is a listing of

Customarily, a trial balance is prepared

A trial balance would only help in detecting which one of the following errors?

An account is an individual accounting record of increases and decreases in specific

A debit is not the normal balance for which of the following?

Which of the following rules is incorrect?

Which of the following statements is false?

Which of the following is the correct sequence of steps in the recording process?

Which of the following is false about a journal?

Haselhof Company purchases equipment for $2,400 and supplies for $700 from Behrman Co. for $3,100 cash. The entry for this transaction will include a

Sara Bernheat withdraws $700 cash from her business for personal use. The entry for this transaction will include a debit of $700 to

On October 3, Ken Steele, a carpenter, received a cash payment for services previously billed to a client. Ken paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a

Posting of journal entries should be done in

The chart of accounts is a

Which of the following is incorrect regarding a trial balance?

A trial balance will not balance if

Which of the following are the same under both GAAP and IFRS?

Which of the following are the same under both GAAP and IFRS?

Which of the following is true?

European companies rely

The double-entry accounting system is the basis of accounting systems

Under IFRS, the trial balance

Fair value is relied on

At June 1, 2016, Cooper Company had an accounts receivable balance of $14,000. During the month, the company performed credit services of $35,000 and collected accounts receivable of $23,000. What is the balance in accounts receivable at June 30, 2016?

TNT has the following transactions during April of the current year. Indicate (a) the effect on the accounting equation and (b) the debit-credit analysis.

Apr. 1 Opens a law office, investing $25,000 in cash.
4 Pays rent in advance for 6 months, $9,000 cash.
16 Receives $8,000 from clients for services provided.
27 Pays secretary $2,800 salary.

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance. Increase (+), Decrease (−).

For each of the following transactions of Neon Garden, identify the account to be debited and the account to be credited.

1. Purchased 18-month insurance policy for cash.
2. Paid weekly payroll.
3. Purchased supplies on account.
4. Received utility bill to be paid at later date.

Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transaction.

1. Barry Cain invested $38,000 cash to start an appliance repair business.
2. Hired an employee to be paid $500 per week, starting tomorrow.
3. Paid two years' rent in advance, $10,800.
4. Paid the worker's weekly wage.
5. Recorded revenue earned and received for the week, $2,900.

Identify the impact on the accounting equation of the following transactions.

1. Purchased 36-month insurance policy for cash.
2. Purchased supplies on account.
3. Received utility bill to be paid at later date.
4. Paid utility bill previously accrued.

Journalize the following transactions for Tanaka Company for June 2016, the company's first month of operations. You may omit explanations for the transactions.

1. Purchased equipment on account for $9,800.
2. Billed customers $5,600 for services performed.
3. Made payment of $2,400 on account for equipment purchased earlier in month.
4. Collected $3,900 on customer accounts.

The following transactions took place for Tanaka company:

1. Purchased equipment on account for $9,800.

2. Billed customers $5,600 for services performed.

3. Made payment of $2,400 on account for equipment purchased earlier in month.

4. Collected $3,900 on customer accounts.

5. What is the balance in Accounts Payable at June 30, 2016?

6. What is the balance in Accounts Receivable at June 30, 2016?

The transactions of the Litehouse Realty are recorded in the general journal below. You are to post the journal entries to T-accounts.

General Journal

Prepare a trial balance from the ledger accounts of Black Diamond Express as of January 31, 2016.

Prepare a corrected trial balance for Howard Company. All accounts should have a normal balance.

HOWARD COMPANY
Trial Balance
For the Quarter Ended 3/31/16

The chart of accounts used by Notwist Copy Company is listed below. You are to indicate the proper accounts to be debited and credited for the following transactions by writing the account number(s) in the appropriate boxes.

CHART OF ACCOUNTS

Under a double-entry system, show how the entry in each statement is entered in the ledger by using debit or credit to indicate the increase or decrease in the affected account.

Selected transactions for A. Byrjun, a property manager, in her first month of business, are as follows.

Jan. 2 Invested $15,000 cash in business.

3 Purchased used car for $5,200 cash for use in business.

9 Purchased supplies on account for $500.

11 Billed customers $2,100 for services performed.

16 Paid $450 cash for advertising.

20 Received $1,300 cash from customers billed on January 11.

23 Paid creditor $300 cash on balance owed.

28 Withdrew $2,000 cash for personal use of owner.

Instructions

For each transaction indicate the following.

(a) The basic type of account debited and credited (asset (A), liability (L), owner's equity (OE)).

(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).

(c) Whether the specific account is increased (incr.) or decreased (decr).

(d) The normal balance of the specific account.

Use the following format, in which the January 2 transaction is given as an example.

For the accounts listed below, indicate if the normal balance of the account is a debit or credit.

For each of the following accounts, indicate the effects of (a) a debit and (b) the normal account balance.

1. Notes Payable
2. Prepaid Insurance
3. Salaries and Wages Expense
4. Service Revenue
5. Equipment
6. Owner's Capital

During an accounting period, a business has numerous transactions affecting each of the following accounts. State for each account whether it is likely to have (a) debit entries only, (b) credit entries only, or (c) both debit and credit entries.

Eight transactions are recorded in the following T-accounts:

Indicate for each debit and each credit: (a) whether an asset, liability, capital, drawing, revenue, or expense account was affected and (b) whether the account was increased (+) or (–) decreased. Answers should be presented in the following chart form:

For each of the following accounts indicate (a) the type of account (Asset, Liability, Owner's Equity, Revenue, Expense), (b) the debit and credit effects, and (c) the normal account balance.

Example

0. Cash
   a. Asset account
   b. Debit increases, credit decreases
   c. Normal balance - debit

Accounts

For each transaction given, enter in the tabulation given below a "D" for debit and a "C" for credit to reflect the increases and decreases of the assets, liabilities, and owner's equity accounts. In some cases there may be a "D" and a "C" in the same box.

Transactions:

1. Owner invests cash in the business.
2. Pays insurance in advance for six months.
3. Pays secretary's salary.
4. Purchases office supplies on account.
5. Pays electricity bill.
6. Borrows money from local bank.
7. Makes payment on account.
8. Receives cash due from customers.
9. Provides services on account.
10. Owner withdraws assets from the business.

Journalize the following business transactions in general journal form. Identify each transaction by number. You may omit explanations of the transactions.

1. The owner, Mai Li, invests $40,000 in cash in starting a real estate office operating as a sole proprietorship.
2. Purchased $500 of supplies on credit.
3. Purchased equipment for $9,000, paying $4,000 in cash and signed a 30-day, $5,000, note payable.
4. Real estate commissions billed to clients amount to $4,000.
5. Paid $800 in cash for the current month's rent.
6. Paid $200 cash on account for supplies purchased in transaction 2.
7. Received a bill for $600 for advertising for the current month.
8. Paid $2,500 cash for office salaries and wages.
9. Li withdrew $1,800 from the business for living expenses.
10. Received a check for $2,500 from a client in payment on account for commissions billed in transaction 4.

Identify the accounts to be debited and credited for each of the following transactions.

1. The owner, O. Gulag, invested $8,000 cash in the business.
2. Purchased supplies on account for $1,000.
3. Billed customers $2,000 for services performed.
4. Paid salaries of $1,200.

Transactions for Joan Jett Company for the month of October are presented below. Journalize each transaction and identify each transaction by number. You may omit journal explanations.

1. Invested $42,000 cash in the business.
2. Purchased land costing $28,000 for cash.
3. Purchased equipment costing $18,000 for $4,000 cash and the remainder on credit.
4. Purchased supplies on account for $800.
5. Paid $1,200 for a one-year insurance policy.
6. Received $3,500 cash for services performed.
7. Received $4,000 for services previously performed on account.
8. Paid wages to employees for $2,800.
9. Petty withdrew $2,300 cash from the business.

Match the basic step in the recording process described by each of the following statements.

A. Analyze each transaction
B. Enter each transaction in a journal
C. Transfer journal information to ledger accounts
____ 1. This step is called posting.
____ 2. Business documents are examined to determine the effects of transactions on the accounts.
____ 3. This step is called journalizing.

Prepare journal entries for each of the following transactions.

1. Performed services for customers on account $8,400.
2. Purchased $20,000 of equipment on account.
3. Received $3,800 from customers in transaction 1.
4. The owner, J. Dean, withdrew $2,900 cash for personal use.

Sigur Ros Company is a newly organized business. The list of accounts to be opened in the general ledger is as follows:

Instructions

Organize the accounts into the order in which they should appear in the ledger of Sigur Ros Company and assign account numbers. Use the following system to assign account numbers.

The transactions of Molina Information Service are recorded in the general journal below. You are to post the journal entries to the accounts in the general ledger. After all entries have been posted, you are to prepare a trial balance on the form provided.

The bookkeeper for Panda Bear Yard Service made a number of errors in journalizing and posting as described below:

1. A debit posting to accounts receivable for $500 was omitted.
2. A payment of accounts payable for $600 was credited to cash and debited to accounts receivable.
3. A credit to accounts receivable for $950 was posted as $95.
4. A cash purchase of equipment for $893 was journalized as a debit to equipment and a credit to notes payable. The credit posting was made for $839 while the debit posting was made for $893.
5. A debit posting of $400 for purchase of supplies was credited to supplies.
6. A debit to repairs expense for $451 was posted as $415.
7. A debit posting for salaries and wages expense for $900 was made twice.
8. A cash purchase of supplies for $700 was journalized and posted as a debit to supplies for $70 and a credit to cash for $70.

Instructions

For each error, indicate (a) whether the trial balance will balance; if the trial balance will not balance, indicate (b) the amount of the difference, and (c) the trial balance column that will have the larger total. Consider each error separately. Use the following form, in which error (1) is given as an example.

Post the following transactions to T-accounts and determine each account's ending balance.

The trial balance of Red House Painters shown below does not balance.

RED HOUSE PAINTERS
Trial Balance
June 30, 2016

An examination of the ledger and journal reveals the following errors:

1. Each of the above listed accounts has a normal balance per the general ledger.
2. Cash of $270 received from a customer on account was debited to Cash $720 and credited to Accounts Receivable $720.
3. A withdrawal of $400 by the owner was posted as a credit to Owner's Drawings, $400 and credit to Cash $400.
4. A debit of $300 was not posted to Salaries and Wages Expense.
5. The purchase of equipment on account for $700 was recorded as a debit to Repair Expense and a credit to Accounts Payable for $700.
6. Services were performed on account for a customer, $510, for which Accounts Receivable was debited $510 and Service Revenue was credited $51.
7. A payment on account for $235 was credited to Cash for $235 and credited to Accounts Payable for $253.

Instructions

Prepare a correct trial balance.

Some of the following errors would cause the debit and credit columns of the trial balance to have unequal totals. For each of the four cases, state whether the error would cause unequal totals in the trial balance. If the error causes unequal totals, indicate the amount of difference between the columns and state whether the debit or credit is larger. Each case is to be considered independently of the others.

1. A payment of $600 to a creditor was recorded by a debit to Accounts Payable of $60 and a credit to Cash of $600.
2. A $450 payment for a printer was recorded by a debit to Equipment of $45 and a credit to Cash for $45.
3. An account receivable in the amount of $3,000 was collected in full. The collection was recorded by a debit to Cash for $3,000 and a debit to Accounts Payable for $3,000.
4. An account payable was paid by issuing a check for $600. The payment was recorded by debiting Accounts Payable $600 and crediting Accounts Receivable $600.

L. Phair and Associates is a financial planning service. The account balances at December 31, 2016 are shown by the following alphabetical list:

Instructions

Prepare a trial balance with the accounts arranged in financial statement order.

The ledger accounts of the Flex Gym at June 30, 2016 are shown below:

Instructions

Prepare a trial balance with the ledger accounts arranged in the proper financial statement order. Include the appropriate heading.

The ledger account balances for Galaxie 500 Company are listed below.

Instructions

Prepare a trial balance in proper form for Galaxie at December 31, 2016.

The bookkeeper for Darrel Johnston Auto Repair made a number of errors in journalizing and posting, as described below.

1. A debit posting of $600 to Accounts Payable was omitted.
2. A debit posting of $700 for Prepaid Insurance was debited to Insurance Expense.
3. A collection from a customer of $150 in payment of its account owed was journalized and posted as a debit to Cash $150 and a credit to Owner's Capital $150.
4. A credit posting of $530 to Accounts Payable was made twice.
5. A cash purchase of supplies for $350 was journalized and posted as a debit to Supplies $35 and a credit to Cash $35.
6. A debit of $658 to Rent Expense was posted as $568

Instructions

For each error:

(a) Indicate whether the trial balance will balance.
(b) If the trial balance will not balance, indicate the amount of the difference.
(c) Indicate the trial balance column that will have the larger total.

Consider each error separately. Use the following form, in which error (1) is given as an example.

| Error (1) | (a) In Balance No | (b) Difference $600 | (c) Larger Column debit |

An _______________ is a record of increases and decreases in specific assets, liabilities, and owner's equity items.

The process of entering an amount on the left side of an account is called _______________ the account, and making an entry on the right side is called _______________ the account.

_______________, _______________, and _______________ have debit normal account balances whereas _______________, _______________, and _______________ have credit normal account balances.

The four subdivisions of owner's equity are: _______________, _______________, _______________, and _______________.

The basic steps in the recording process are: _______________ each transaction, enter the transaction in a _______________, and transfer the _______________ information to appropriate accounts in the _______________.

A sales slip, a check, and a cash register tape are examples of _______________ used as evidence that a transaction has taken place.

An accounting record where transactions are initially recorded in chronological order is called a _______________.

When three or more accounts are required in one journal entry, the entry is referred to as a _______________ entry.

The entire group of accounts and their balances maintained by a company is called the _______________.

A two column list of all accounts and their balances at a given time is a _______________.

Match the items below by entering the appropriate code letter in the space provided.

☐ 1. An entry that involves three or more accounts.
☐ 2. Transferring journal entries to ledger accounts.
☐ 3. The side which increases an account.
☐ 4. A list of all the accounts used by an enterprise.
☐ 5. A record of increases and decreases in specific assets, liabilities, and owner's equity items.
☐ 6. Left side of an account.
☐ 7. An entry that involves only two accounts.
☐ 8. A book of original entry.
☐ 9. A list of accounts and their balances at a given time.
☐ 10. Has a credit normal balance

An account is an important accounting record where financial information is stored until needed. Briefly explain (1) the nature of an account, (2) the different types of accounts, and (3) the manner in which an account is increased and decreased and its normal balance.

Your roommate, a marketing major, thinks that debit means decrease and credit means increase. And, that every account can be debited and credited and as result, every account can have both a debit and a credit balance. Explain to your roommate (1) the meaning of debit and credit; (2) which accounts can only be debited, which can only be credited, and which can be both debited and credited; and (3) which accounts normally have debit balances and which credit balances.

A fellow classmate is confused about how debits and credits relate to the basic accounting equation. State the basic accounting equation, convert it into the expanded accounting equation, and then explain how it ties into the rules for debits and credits.

Describe the process of preparing a trial balance. What is the purpose of preparing a trial balance? If a trial balance does not balance, identify what might be the reasons why it does not balance. If the trial balance does balance, does that insure that the ledger accounts are correct? Explain.

A classmate who is a computer science major thinks that accountants are obsolete. She states that computers can do the entire process without any human assistance.

Discuss the steps in the recording process and indicate what role the computer plays in that process.

Amy Pond, a fellow employee, wants to understand the basic steps in the recording process. Identify and briefly explain the steps in the order in which they occur.

All recordable transactions are initially recorded in the journal. Discuss the contributions that the journal makes to the recording process.

A bookkeeping student has come to you for tutoring on the recording process. She is confused about the relationship between the chart of accounts and the ledger. Explain the purpose of the chart of accounts and the general ledger. In your explanation indicate the relationship between these two items as well.

The process of transferring the information in the journal to the general ledger is called posting. Explain the posting process, including the importance of the journal page number and the account numbers.

During a study session, a classmate states that it is not necessary to make journal entries and then post them to the ledger. She states that it is sufficient to analyze the transaction and simply record the information in T-accounts.

What is your response to this statement? Be brief, yet concise.

Terry Bradshaw was appointed the manager of Steelers Properties, a recently formed company that manages residential rental properties. Linda Cohen is the accountant. She prepared a chart of accounts based on an analysis of the expenditures of the company. One of the largest expense categories is Travel and Entertainment. Mr. Bradshaw believes that it is important to maintain a presence in the social life of the city. In this, he sharply differs from his father, John Bradshaw. The elder Mr. Bradshaw has set up Steelers Properties in order to test his son's management skills before allowing him to manage the more lucrative commercial property business. John Bradshaw provided the capital for Steelers, and maintains close contact with the company. He allowed his son, however, to hire his own employees.

Terry has asked Ms. Cohen to change the name of the Travel and Entertainment account to Property Development. He hopes to deflect his father's attention away from the amount he has spent on travel and entertainment until he has proven that his methods work. When Ms. Cohen resisted, he reminded her that he, not his father, hired her. He also reminded her that she had been enthusiastic about his business plans when she was hired.

Required:

1. Who are the stakeholders in this situation?
2. Should Ms. Cohen agree to the change in the Travel and Entertainment account to Property Development? Explain.

A classmate is considering dropping his accounting class because he cannot understand the rules of debits and credits.

a. Can the student be successful in the course without an understanding of the rules of debits and credits?
b. Explain the rules of debits and credits in a way that will help him understand them.