Deck 3: Beginning the Accounting Cycle: Journalizing, Posting, and the Trial Balance

Question 1

Financial statements that are prepared for a period shorter than a year are called

A) accounting period statements.
B) fiscal year statements.
C) interim statements.
D) journal statements.

Answer 1

C

Question 2

How are credit descriptions distinguished from debit descriptions in the general journal?

A) A line separation.
B) A different colour.
C) Indenting.
D) There is no distinction.

Answer 2

C

Question 3

The entry to record the payment of office salaries would be

A) Debit Cash; Credit Accounts Receivable.
B) Debit Cash; Credit Salaries Expense.
C) Debit Salaries Expense; Credit Capital.
D) Debit Salaries Expense; Credit Cash.

Answer 3

D

Question 4

If you debit Prepaid Insurance, you most likely will

A) credit Fees Earned.
B) debit Cash.
C) credit Insurance Expense.
D) credit Cash.

Question 5

When recording a transaction in a journal, the account listed first is generally the

A) debit.
B) credit.
C) increase.
D) decrease.

Question 6

A journal entry affecting three or more accounts is called a

A) multi-level entry.
B) multi-step entry.
C) compound entry.
D) simple entry.

Question 7

Business transactions are first recorded in the

A) ledger.
B) journal.
C) T account.
D) balance sheet.

Question 8

Revenue is traditionally recognized in the accounting records when

A) cash is received.
B) services are provided to the customer.
C) it is incurred.
D) None of the answers are correct.

Question 9

The most logical reason to use a journal instead of T accounts is

A) it makes finding errors easier.
B) it keeps all transactions categorized by type.
C) only one book is needed for all of a firm's bookkeeping needs.
D) a journal consists of removable pages.

Question 10

The process of initially recording business transactions in a journal is called

A) sliding.
B) posting.
C) journalizing.
D) transposing.

Question 11

The process that begins with recording business transactions and includes the completion of the financial statements is the

A) calendar year.
B) natural business year.
C) fiscal year.
D) accounting cycle.

Question 12

The time period for which the income statement is prepared is a(n)

A) calendar year.
B) accounting period.
C) fiscal period.
D) accounting cycle.

Question 13

How are explanations distinguished in the journal?

A) They are underlined.
B) They are in bold print.
C) They are written below the credit entries.
D) They are written along the margin, beside the debit and credit entries.

Question 14

The journal entry debiting Cash and crediting Capital would be a result of a(n)

A) withdrawal.
B) expense.
C) investment.
D) revenue.

Question 15

The general journal

A) is the book of original entry.
B) is the book of final entry.
C) contains account balances.
D) is completed after the general ledger.

Question 16

The proper format for a journal entry includes all of the following EXCEPT

A) the total amounts of debits must equal the total amount of credits.
B) skip a line between transactions.
C) the credit portion of the transaction is always first.
D) listed in chronological order.

Question 17

The first step of the accounting cycle is

A) recording journal entries.
B) posting to the ledger.
C) preparing a trial balance.
D) analyzing business transactions.

Question 18

The twelve-month period a business chooses for its accounting period is a(n)

A) calendar year.
B) accounting period.
C) fiscal year.
D) accounting cycle.

Question 19

"PR" in the general journal and general ledger stands for

A) peer reviewer.
B) posting reference.
C) prior receipt.
D) None of the above are correct.

Question 20

The general ledger

A) is the book of original entry.
B) is the book of final entry.
C) lists transactions in chronological order.
D) contains T accounts.

Question 21

On July 1, Hill's Construction paid six months' insurance in advance. The journal entry to record this transaction is

A) Debit Prepaid Insurance; Credit Cash.
B) Debit Insurance Expense; Credit Cash.
C) Debit Cash; Credit Prepaid Insurance.
D) Debit Cash; Credit Insurance Expense.

Question 22

Antonio's catered a reception. The total price was $850. Their customer paid half of the fee in cash and agreed to pay the remainder later. The journal entry to record this transaction is

A) Cash 425 Accounts Receivable 425
Catering Service Fees 850
B) Cash 850 Accounts Receivable 850
C) Cash 850 Catering Service Fees 850
D) Accounts Receivable 850 Cash 425
Catering Service Fees 425

Question 23

Which of the following accounts would be debited in a proper journal entry?

A) Accounts Payable when it is increased
B) Accounts Receivable when it is increased
C) Cash when it is decreased
D) Capital when it is increased

Question 24

Which of the following entries records the owner taking cash for personal use?

A) Wage Expense, debit; Cash, credit.
B) Capital, debit; Cash, credit.
C) No entry is necessary since the owner owns the cash and the entire business.
D) Withdrawals, debit; Cash, credit.

Question 25

Which of the following entries records the acquisition of office supplies for cash?

A) Office Supplies 4,000 Cash 4,000
B) Office Supplies 4,000 Accounts Payable 4,000
C) Equipment 4,000 Accounts Payable 4,000
D) Equipment 4,000 Accounts Receivable 4,000

Question 26

As Withdrawals increase,

A) Owner's Equity decreases.
B) Owner's Equity increases.
C) Cash increases.
D) Expense increases.

Question 27

Riley's Book Review billed customers $350 for editing work completed this month. The journal entry to record this transaction is

A) Accounts Receivable debit $350; Editing Revenue credit $350.
B) Editing Revenue debit $350; Riley, Capital credit $350.
C) Accounts Payable debit $350; Editing Revenue credit $350.
D) Editing Revenue debit $350; Withdrawals credit $350.

Question 28

A calendar year is

A) any 12-month period that a business chooses for its accounting year.
B) the 12-month period beginning with January.
C) the period for when a interim financial statement would be completed.
D) All of these answers are correct.

Question 29

The entry to record delivering a financial lecture and immediately collecting payment from the customer would be

A) Cash 750 Lecture Fees 750
B) Cash 750 Accounts Payable 750
C) Lecture Fees 750 Cash 750
D) Lecture Fees 750 Accounts Payable 750

Question 30

BNL completed a performance and collected revenue of $10,000 not previously billed or recorded. The journal entry to record the collection would be

A) Accounts Receivable 10,000 Performance Fees 10,000
B) Cash 10,000 Performance Fees 10,000
C) Accounts Receivable 10,000 Cash 10,000
D) Performance Fees 10,000 Cash 10,000

Question 31

If the Owner's Equity account increases during the year, most likely

A) The company was promised a large and profitable contract for next year.
B) Equipment purchases were higher than average for the year.
C) Payment of liabilities was lower than average for the year.
D) The owner made additional investment during the year.

Question 32

The general journal does not have a column titled

A) Date.
B) Account Titles & Descriptions.
C) Dr. and Cr.
D) Balance.

Question 33

A transaction completed by Norton Company caused a $4,000 increase in both the total assets and the total liabilities. This transaction could have been

A) purchase of office equipment for $12,000, paying $8,000 cash, with the rest on account.
B) investment by the owner of an additional $4,000.
C) purchase of office equipment, paying $4,000 cash, and $8,000 on account.
D) None of these answers are correct.

Question 34

When a computer is used for accounting, the journal may be stored in any of the following locations, EXCEPT

A) the cloud.
B) on a hard drive.
C) in a paper file folder.
D) on a USB drive.

Question 35

During the month of January, Katelyn invested $10,000 in starting her legal practice. The proper journal entry would be

A) Cash, debit $10,000; Katelyn's Capital, credit $10,000.
B) Katelyn's Capital, debit $10,000; Cash, credit $10,000.
C) Cash, debit $10,000; Revenue, credit $10,000.
D) Katelyn's Withdrawals, debit $10,000; Cash, credit $10,000.

Question 36

Which of the following entries would record the payment of a utility bill?

A) Utilities Expense, debit; Cash, credit.
B) Cash, debit; Utilities Expense, credit.
C) Utilities Expense, debit; Accounts Payable, credit.
D) Accounts Payable, debit; Utilities Expense, credit.

Question 37

Renzi's Volleyball Gym purchased equipment for $1,400. It made a down payment of $800 with the remainder on account. The journal entry to record this transaction is

A) Cash 800 Accounts Receivable 800
B) Accounts Payable 600 Cash 800
Equipment 1,400
C) Supplies 1,400 Cash 800
Accounts Payable 600
D) Equipment 1,400 Accounts Payable 600
Cash 800

Question 38

Interim statements are prepared to

A) notify management of the company's current financial position.
B) notify investors of the company's current financial position.
C) allow management to make changes to the business before processing year-end financial statements.
D) All of the above are correct.

Question 39

Conner Sales' total assets and total liabilities increased $500. The transaction could have been

A) purchase of supplies for cash, $500.
B) purchase of supplies for $600 with a down payment of $100 and the remainder on account.
C) paid the rent for the month, $600.
D) None of these answers are correct.

Question 40

During the month of October, Ford advertised on the Internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is

A) Accounts Payable debit; Cash credit.
B) Advertising Expense debit; Accounts Payable credit.
C) Advertising Expense debit; Cash credit.
D) A journal entry is not made in November.

Question 41

If Accounts Payable has been debited, it is most likely that

A) the company made a payment to a creditor.
B) a customer made a payment.
C) the company made a purchase on account.
D) None of these are possible.

Question 42

If Accounts Payable has been credited, it is most likely that

A) a collection from a customer was made.
B) a service was provided to a cash customer.
C) the company made a purchase on account.
D) None of these are possible.

Question 43

To find an explanation for a transaction, look in the

A) ledger.
B) balance sheet.
C) journal.
D) trial balance.

Question 44

If Rent Expense has been debited, it is likely that

A) the rent was paid for three months in advance.
B) a copy of the lease was received.
C) this month's rent was paid.
D) All of these are possible.

Question 45

The general journal entry to record the earning of revenue would most commonly include

A) a debit to Accounts Receivable and a credit to Capital.
B) a debit to Cash and a credit to Capital.
C) a debit to Fees Earned and a credit to Cash.
D) a debit to Accounts Receivable and a credit to Fees Earned.

Question 46

If Capital has been credited, it is likely that

A) services were provided to a cash customer.
B) services were provided to a charge customer.
C) the owner made an investment.
D) All of these are possible.

Question 47

If Cash has been debited, it is likely that

A) the owner made an investment.
B) a charge customer made a payment.
C) the business borrowed cash from the bank.
D) All of these are possible.

Question 48

If Fees Earned has been credited, it is most likely that

A) services were provided.
B) the owner made an investment.
C) a correcting entry for the overstatement of revenue was recorded.
D) All of these are possible.

Question 49

The simplest form of a journal is a(n)

A) special journal.
B) interim journal.
C) accounting journal.
D) general journal.

Question 50

If Prepaid Rent has been debited, it is likely that

A) the rent was paid for three months in advance.
B) a bill for the past month's rent was received.
C) this month's rent was paid.
D) All of these are possible.

Question 51

Which of the following statements is FALSE regarding a proper journal entry?

A) Debits are always listed first in the entry.
B) Credits are always indented.
C) Skip a line between transactions.
D) Always list the assets first.

Question 52

If Accounts Payable has been debited, it is most likely that

A) a payment was made on account.
B) a purchase was made on account.
C) a charge customer made a payment.
D) None of these are possible.

Question 53

If Accounts Payable has been credited, it is most likely that

A) a payment was made on account.
B) a purchase was made on account.
C) a correcting entry was made for the overstatement of the purchase of equipment on account.
D) None of these are possible.

Question 54

The journal entry to record an exchange of assets would include

A) a debit to Cash and a credit to Fees Earned.
B) a debit to Supplies and a credit to Accounts Payable.
C) a debit to Cash and a credit to Accounts Receivable.
D) a debit to Fees Earned and a credit to Accounts Receivable.

Question 55

When the telephone bill for this period is paid,

A) Telephone Expense is debited and Cash is credited.
B) Telephone Expense is credited and Cash is debited.
C) Telephone Expense is debited and Accounts Payable is credited.
D) Accounts Payable is credited and Telephone Expense is debited.

Question 56

The general journal entry to record a payment to a creditor would most commonly include

A) a debit to Accounts Payable and a credit to Cash.
B) a debit to Capital and a credit to Cash.
C) a debit to Supplies and a credit to Cash.
D) a debit to Cash and a credit to Accounts Payable.

Question 57

The journal entry to record an investment by the owner would most commonly include

A) a debit to Cash and a credit to Fees Earned.
B) a debit to Capital and a credit to Cash.
C) a debit to Fees Earned and a credit to Capital.
D) a debit to Cash and a credit to Capital.

Question 58

The journal entry to record a withdrawal by the owner would most commonly include

A) a debit to Wage Expense and a credit to Cash.
B) a debit to Capital and a credit to Cash.
C) a debit to Withdrawals and a credit to Cash.
D) a debit to Cash and a credit to Wage Expense.

Question 59

The general journal entry to record the purchase of an asset on account would include

A) a debit to Accounts Receivable and a credit to Fees Earned.
B) a debit to Equipment and a credit to Accounts Payable.
C) a debit to Accounts Payable and a credit to Equipment.
D) a debit to Supplies and a credit to Cash.

Question 60

An overpayment was discovered in computing and paying the wages of a West Heights Country Club employee. When the employee returns the amount of the overpayment, West Heights should make which of the following entries?

A) Cash, debit; Wages Expense, credit
B) Wages Payable, debit; Wages Expense, credit
C) Wages Expense, debit; Cash, credit
D) Wages Expense, debit; Wages Payable, credit

Question 61

Transactions are listed in chronological order in the journal.

Question 62

A calendar year is any twelve-month period.

Question 63

The first entry for Pat's Car Wash included debits to Cash, Office Equipment, and Building; as well as a credit to Pat Wagner, Capital. This entry would be called a

A) compound entry.
B) complicated entry.
C) multiple entry.
D) final entry.

Question 64

Interim statements are statements that are usually prepared for a portion of the business' fiscal year.

Question 65

During the month of June, Charles Green invested $5,000 in starting his company, Green Lawn Service. The proper journal entry would be

A) Cash 5,000 Charles Green, Capital 5,000
B) Charles Green, Capital 5,000 Cash 5,000
C) Cash 5,000 Lawn Service Fees 5,000
D) Charles Green, Capital 5,000 Cash 5,000

Question 66

Rent paid in advance is called a(n)

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

Question 67

A compound journal entry affects more than two accounts in the transaction.

Question 68

B. Flat, CPA, collected fees of $650 not previously billed or recorded. The journal entry to record the collection would include

A) debit Cash, $650; credit Accounting Fees, $650.
B) debit Accounts Receivable, $650; credit Accounting Fees, $650.
C) debit Accounting Fees, $650; credit Accounting Fees, $650.
D) debit Cash, $650, credit Accounts Receivable, $650.

Question 69

A ledger is called the book of final entry.

Question 70

A business's fiscal year that ends at the same time as a slow seasonal period begins is the natural business year.

Question 71

A fiscal year is always January 1 through December 31.

Question 72

During the month of August, Our Town Hardware Store advertised an end-of-the-year sale in the local newspaper. Our Town Hardware Store received the bill for $60 in August, but waited until September to pay the advertising expense. The journal entry to record the bill in August is

A) Advertising Expense 60 Accounts Receivable 60
B) Advertising Expense 60 Accounts Payable 60
C) Accounts Payable 60 Advertising Expense 60
D) No entry is made in August.

Question 73

The debit is indented in a journal entry.

Question 74

The time period for which an income statement is prepared is called the accounting period.

Question 75

Rent paid in advance is a liability.

Question 76

Interim reports are usually prepared once a year.

Question 77

A compound journal entry affects only two accounts in the transaction.

Question 78

The credit part of the transaction is recorded first in the journal entry.

Question 79

Which of the following accounts would be credited in a proper journal entry?

A) Cash when it is increased
B) Service Fees when it is increased
C) Capital when it is decreased
D) Accounts Payable when it is decreased

Question 80

Transactions are entered in a journal by

A) company name in alphabetical order.
B) order of importance of company to our business.
C) the order they appear on the accountant's desk.
D) chronological order.