Exam 16: Accounting for a Professional Service Business: The Combination Journal

Match the terms with the definitions. -A journal with special and general columns.

If a business records revenues when earned, regardless of whether cash has been received, and records expenses when they are incurred, the accounting system is a(n)

Under the modified cash basis of accounting, adjustments are made only for prepaid items and depreciation on plant and equipment.

In using a combination journal, posting requires less time; however, the danger of making a posting error is increased.

A journal with special and general columns is called a

Financial statements are normally prepared at the end of the fiscal year.

Many small professional service businesses use the modified cash basis of accounting.

Which of the following is the proper sequence for end-of-the-month work with the combination journal?

To be sure that the debits entered in the journal are equal to the credits, the journal must be posted.

The amounts in the general columns of the combination journal should be posted

A journal with Debit and Credit columns for Cash, as well as General Debit and General Credit columns, is called a general journal.

A considerable amount of time and space is saved if a journal contains a special column for cash debits and one for cash credits.

To record the purchase of assets on account under the modified cash accounting method,

More time is required if a journal contains special columns for cash debits and cash credits.