ACG 3131 - CH 2 Review Questions and Correct Answers
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Course
ACG 3131
Institution
ACG 3131
Events that directly affect the company: economic event
Exchange between a company and another entity: (Example: purchase inventory, borrow from bank, pay salaries to EE). external event
Customized software systems that integrates all departments and functions across a company into one system: En...
ACG 3131 - CH 2 Review Questions and
Correct Answers
Events that directly affect the company: ✅economic event
Exchange between a company and another entity:
(Example: purchase inventory, borrow from bank, pay salaries to EE). ✅external event
Customized software systems that integrates all departments and functions across a
company into one system: ✅Enterprise Resource Planning (ERP)
Amount *invested* by shareholders into a corporation: ✅paid-in capital
Amounts *earned* by the corporation (on behalf of its shareholders): ✅retained
earnings
Stockholder's equity (aka owner's equity) is made up of (2): ✅1. paid-in capital
2. retained earnings
Dual effect on the accounting system: ✅double entry system
Elements of the accounting equation are represented by: ✅accounts
Where accounts are held and used to keep track of increases and decreases in
financial position elements: ✅general ledger
Permanent or Temporary?
-assets
-liabilities
-shareholder's equity ✅Permanent Accounts
-the basic financial position elements of the accounting equation.
Permanent or Temporary?
-revenue
-expense
-gains
-losses ✅Temporary accounts
-These are closed to the income summary and then to RE account.
-these keep track of changes in the RE earnings component of SE.
Ten Steps in the Accounting Cycle: ✅Step 1: Obtain info from source documents
Step 2: Analyze transaction
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