Analyzing For Business Transactions

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Question 1
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The first step in the processing of a transaction is to analyze the transaction and source documents.

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Question 2
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Preparation of a trial balance is the first step in processing a financial transaction.

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Question 3
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Source documents provide evidence of business transactions and are the basis for accounting entries.

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Question 4
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Items such as sales tickets, bank statements, checks, and purchase orders are examples of a business's source documents.

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Question 5
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An account is a record of increases and decreases in a specific asset, liability, equity, revenue, or expense item.

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Question 6
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A customer's promise to pay on credit is classified as an account payable by the seller.

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Question 7
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Dividends paid to the stockholders are a business expense.

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Question 8
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The purchase of land and buildings will generally be recorded in the same ledger account.

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Question 9
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Unearned revenues are classified as liabilities.

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Question 10
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Cash paid to stockholders by the business of a corporation and used for personal expenses, should be treated as an expense of the business.

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Question 11
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When a company provides services for which cash will not be received until some future date, the company should record the amount charged as accounts receivable.

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Question 12
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A company's chart of accounts is a list of all the accounts used and includes an identification number assigned to each account.

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Question 13
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An account's balance is the difference between the total debits and total credits for the account, including any beginning balance.

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Question 14
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The right side of an account is called the debit side.

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Question 15
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In a double-entry accounting system, the total dollar amount debited must always equal the total dollar amount credited.

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Question 16
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Increases in liability accounts are recorded as debits.

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Question 17
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Debits increase asset and expense accounts.

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Question 18
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Credits always increase account balances.

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Question 19
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Crediting an expense account decreases it.

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Question 20
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A revenue account normally has a debit balance.

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