Question 1

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

Accepted Answer

A)  trial balance. 
B)  income statement. 
C)  book of original entry. 
D)  ledger. 
A)  trial balance. 
B)  income statement. 
C)  book of original entry. 
D)  ledger.

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  compound entry. 
B)  triple entry. 
C)  multiple entry. 
D)  simple entry. 
A)  compound entry. 
B)  triple entry. 
C)  multiple entry. 
D)  simple entry.

Question 4

Which of the following is false about a journal?

Accepted Answer

A)  It discloses in one place the complete effects of a transaction. 
B)  It provides a chronological record of transactions. 
C)  It helps to prevent or locate errors because debit and credit amounts for each entry can be readily compared. 
D)  It keeps in one place all the information about changes in specific account balances. 
A)  It discloses in one place the complete effects of a transaction. 
B)  It provides a chronological record of transactions. 
C)  It helps to prevent or locate errors because debit and credit amounts for each entry can be readily compared. 
D)  It keeps in one place all the information about changes in specific account balances.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

The standard form of a journal entry has the

Accepted Answer

A)  debit account entered first and indented. 
B)  credit account entered first and indented. 
C)  debit account entered first at the extreme left margin. 
D)  credit account entered first at the extreme left margin. 
A)  debit account entered first and indented. 
B)  credit account entered first and indented. 
C)  debit account entered first at the extreme left margin. 
D)  credit account entered first at the extreme left margin.

Question 7

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

Accepted Answer

A)  debit, credit, and account name. 
B)  debit, credit, and reference. 
C)  debit, credit, and balance. 
D)  debit, credit, and date. 
A)  debit, credit, and account name. 
B)  debit, credit, and reference. 
C)  debit, credit, and balance. 
D)  debit, credit, and date.

Question 8

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

Accepted Answer

A)  cash register sales tape. 
B)  bill. 
C)  advertising brochure. 
D)  check. 
A)  cash register sales tape. 
B)  bill. 
C)  advertising brochure. 
D)  check.

Question 9

A chart of accounts usually starts with

Accepted Answer

A)  asset accounts. 
B)  expense accounts. 
C)  liability accounts. 
D)  revenue accounts. 
A)  asset accounts. 
B)  expense accounts. 
C)  liability accounts. 
D)  revenue accounts.

Question 10

At January 1, 2010, LeAnna Industries reported owner's equity of $130,000. During 2010, LeAnna had a net loss of $30,000 and owner drawings of $20,000. At December 31, 2010, the amount of owner's equity is

Accepted Answer

A)  $130,000. 
B)  $140,000. 
C)  $100,000. 
D)  $80,000. 
A)  $130,000. 
B)  $140,000. 
C)  $100,000. 
D)  $80,000.

Question 11

Which of the following rules is incorrect?

Accepted Answer

A)  Credits decrease the drawing account. 
B)  Debits increase the capital account. 
C)  Credits increase revenue accounts. 
D)  Debits decrease liability accounts. 
A)  Credits decrease the drawing account. 
B)  Debits increase the capital account. 
C)  Credits increase revenue accounts. 
D)  Debits decrease liability accounts.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

The ledger should be arranged in

Accepted Answer

A)  alphabetical order. 
B)  chronological order. 
C)  dollar amount order. 
D)  financial statement order. 
A)  alphabetical order. 
B)  chronological order. 
C)  dollar amount order. 
D)  financial statement order.

Question 17

In the first month of operations for Widget Industries, the total of the debit entries to the cash account amounted to $8,000 ($4,000 investment by the owner and revenues of $4,000). The total of the credit entries to the cash account amounted to $5,000 (purchase of equipment $2,000 and payment of expenses $3,000). At the end of the month, the cash account has a(n)

Accepted Answer

A)  $2,000 credit balance. 
B)  $2,000 debit balance. 
C)  $3,000 debit balance. 
D)  $3,000 credit balance. 
A)  $2,000 credit balance. 
B)  $2,000 debit balance. 
C)  $3,000 debit balance. 
D)  $3,000 credit balance.

Question 18

Posting of journal entries should be done in

Accepted Answer

A)  account number order. 
B)  alphabetical order. 
C)  chronological order. 
D)  dollar amount order. 
A)  account number order. 
B)  alphabetical order. 
C)  chronological order. 
D)  dollar amount order.

Question 19

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

Accepted Answer

A)  the company's bank. 
B)  owner's equity. 
C)  ledger accounts. 
D)  financial statements. 
A)  the company's bank. 
B)  owner's equity. 
C)  ledger accounts. 
D)  financial statements.

Question 20

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

Accepted Answer

A)  journalizing. 
B)  analyzing. 
C)  reporting. 
D)  posting. 
A)  journalizing. 
B)  analyzing. 
C)  reporting. 
D)  posting.

Exam 2: The Recording Process

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

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

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

Which of the following is false about a journal?

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

The standard form of a journal entry has the

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

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

A chart of accounts usually starts with

At January 1, 2010, LeAnna Industries reported owner's equity of $130,000. During 2010, LeAnna had a net loss of $30,000 and owner drawings of $20,000. At December 31, 2010, the amount of owner's equity is

Which of the following rules is incorrect?

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

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

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

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

The ledger should be arranged in

Posting of journal entries should be done in

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 procedure of transferring journal entries to the ledger accounts is called

Accounting in Action

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Plant Assets, Natural Resources, and Intangible Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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