Deck 3: Beginning the Accounting Cycle

Question 1

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

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

Answer 1

C

Question 2

The first step of the accounting cycle is:

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

Answer 2

D

Question 3

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.

Answer 3

C

Question 4

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

Question 5

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

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

Question 6

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 closing entries.

Question 7

How are credits distinguished from debits in the journal?

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

Question 8

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

A) customer payment.
B) owner withdrawal.
C) investment.
D) revenue.

Question 9

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 Receivable, debit; Utilities Expense, credit

Question 10

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) periodic statements.

Question 11

A journal entry affecting three or more accounts is called a:

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

Question 12

The time period for which a statement of owner's equity is prepared is a(n):

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

Question 13

During the month of June, Jane invested $19,000 in starting her legal practice. The proper journal entry would be:

A) Cash, debit $19,000; Jane, Capital, credit $19,000
B) Accounts Payable, debit $19,000; Cash, credit $19,000
C) Cash, debit $19,000; Revenue, credit $19,000
D) Jane's Capital, debit $19,000; Cash, credit $19,000

Question 14

Revenue is traditionally recognized in the accounting records when:

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

Question 15

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

A) debit.
B) credit.
C) increase.
D) highest dollar.

Question 16

The entry to record the payment of office salaries would be:

A) Debit Cash; Credit Salaries Payable
B) Debit Cash; Credit Salaries Expense
C) Debit Salaries Expense; Credit Accounts Payable
D) Debit Salaries Expense; Credit Cash

Question 17

How are explanations distinguished in the journal?

A) They are underlined.
B) They are marked with an X before and after the explanation.
C) They are indented below the credit entries.
D) They are written all capital letters, in line with the debit entries.

Question 18

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) Withdrawals, debit; Cash, credit
D) No entry is necessary since this is a personal transaction.

Question 19

Business transactions are first recorded in the:

A) ledger.
B) journal.
C) trial balance.
D) interim statement.

Question 20

If you debit Prepaid Insurance, you most likely will:

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

Question 21

Sue's Book Review billed customers $550. The journal entry to record this transaction is:

A) Accounts Receivable, debit $550; Editing Fees, credit $550
B) Editing Fees, debit $550; Sue, Capital, credit $550
C) Accounts Payable, debit $550; Editing Fees, credit $550
D) Cash, debit $550; Sue, Accounts Receivable, credit $550

Question 22

The journal entry to record a shift 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 23

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

A) Notes 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

Renzi's Volleyball Gym purchased equipment for $1,300. It made a down payment of $500 with the remainder on account. The journal entry to record this transaction is:

Question 25

During the month of October, Ford advertised on the Internet. Ford received the bill for $500 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) The journal entry is not made in November.

Question 26

Bob's catered a reception. The total price was $600. The customer paid half of the fee in cash and placed the remainder on account. The journal entry to record this transaction is:

Question 27

A transaction completed by Norton Company caused a $10,000 increase in both the total assets and the total liabilities. This transaction could have been:

A) purchase of office equipment for $16,000, paying $6,000 cash, with the rest on account.
B) investment by the owner of an additional $10,000.
C) purchase of office equipment, paying $10,000 cash, and $6,000 on account.
D) a loan of $2,000, on a $12,000 purchase of equipment with $10,000 down payment.

Question 28

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 29

As Withdrawals increase:

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

Question 30

On July 1, Bill'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 Accounts Payable
C) debit Cash; credit Prepaid Insurance
D) debit Cash; credit Insurance Expense

Question 31

Conner Sales' total assets and total liabilities increased $3,400. The transaction could have been:

A) purchase of supplies for cash, $3,400.
B) purchase of supplies for $3,700 with a down payment of $300 and the remainder on account.
C) paid the rent for the month, $3,400.
D) None of these answers is correct.

Question 32

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 an interim financial statement would be completed.
D) All of these answers are correct.

Question 33

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 34

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 35

The general journal does NOT have a column titled:

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

Question 36

The general journal entry to record the purchase of an asset for cash 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 Cash.
D) a debit to Supplies and a credit to Cash.

Question 37

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

A) a collection from a customer was made.
B) a service was provided on account.
C) the company made a purchase and will pay for the purchase next month.
D) None of these is possible.

Question 38

CSI completed a performance and collected revenue of $12,000 not previously billed or recorded. The journal entry to record the collection would be:

Question 39

If Accounts Receivable has been credited, it is most likely that:

A) the company collected a payment from a customer.
B) the company made a payment on account.
C) the company made a purchase on account.
D) None of these is possible.

Question 40

The entry to record completing a financial lecture and immediately collecting payment from customers would be:

Question 41

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) an expense was paid with cash.

Question 42

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

Question 43

If Cash has been debited, it is likely that:

A) the owner made an investment.
B) a customer made a payment.
C) a customer paid cash for services.
D) All of these are possible.

Question 44

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 45

Interim statements are statements that are prepared for a minimum of 6 months of the fiscal year.

Question 46

Insurance paid in advance is an expense.

Question 47

A fiscal year is always January 1 through December 31.

Question 48

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) the owner withdrew cash.

Question 49

A journal is called the book of final entry.

Question 50

To find an explanation for a transaction, look in the:

A) income statement.
B) balance sheet.
C) journal.
D) trial balance.

Question 51

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

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

Question 52

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 53

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

A) a sale 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) a customer paid a bill on account.

Question 54

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 55

Transactions are listed in chronological order in the journal.

Question 56

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) a customer paid in advance.

Question 57

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 expenses first.

Question 58

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 59

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 indented.
D) listed in the order of highest dollar value.

Question 60

An overpayment was discovered in computing and paying the wages of a Plum Hollow Country Club employee. When the employee returns the amount of the overpayment, Plum Hollow 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) Cash, debit; Wages Payable, credit

Question 61

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

Question 62

Define and discuss a calendar year, accounting period, and fiscal year.

Question 63

The debit part of the transaction is recorded second in a journal entry.

Question 64

The posting reference column in the ledger is:

A) used to record the journal and page number the transactions originated.
B) used to record the ledger number.
C) used to record the date.
D) not used.

Question 65

James Company began business in July. Prepare the following transactions for June. Omit explanations.
July

Question 66

The debit is indented in a journal entry.

Question 67

The purpose of posting is to:

A) record the transactions in chronological order in the journal.
B) provide an explanation of the transaction.
C) update the account balances in the ledger.
D) correct a previous entry.

Question 68

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

Question 69

Posting is performed by transferring information from the journal to the:

A) balance sheet.
B) trial balance.
C) ledger.
D) income statement.

Question 70

A company would review the journal if an account balance was needed.

Question 71

Post the following to the ledger of Smith Services. The partial chart of accounts is:
111 Cash
121 Accounts Receivable
211 Accounts Payable
411 Service Fees Earned

Question 72

Provide an explanation for the following journal entries:
a) Prepaid Rent debited, Cash credited
b) Office supplies debited, Cash credited
c) Cash debited, Capital credited
d) Utility expense debited, Cash credited
e) Accounts Payable debited, Cash credited

Question 73

The general ledger:

A) is after the trial balance.
B) is the book of final entry.
C) lists the transactions in chronological order.
D) is before the general journal.

Question 74

Complete the following questions based on the journal entry below:
a) Date of Journal entry: ___________
b) Name of account debited: ___________
c) Name of account credited: ___________
d) Provide an explanation for this entry: ___________
e) Page of Journal: ___________
f) Account number for Cash: ___________
g) Account number for Accounts Receivable: ___________

Question 75

Complete the following entries by using a "debit" or "credit."
a) Received payment from a customer. Cash would have a: ________
b) Owner makes an investment of equipment. Capital would have a: ________
c) Paid rent in advance. Prepaid Rent would have a: ________
d) Billed a customer for services rendered. Revenue would have a: ________
e) Paid an advertising bill received last month. Cash would have a: ________
f) Owner withdrew cash. Withdrawals would have a: ________

Question 76

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

A) past reference.
B) posting reference.
C) prior receipt.
D) post review.

Question 77

Record the following selected transactions for January in a two-column journal, identifying each entry by letter:
(a) Earned $8,000 fees; customer will pay later.
(b) Purchased equipment for $50,000, paying $20,000 in cash and the remainder on credit
(c) Paid $3,000 for rent for January.
(d) Purchased $2,500 of supplies on account.
(e) A. Allen $1,000 investment in the company.
(f) Received $7,000 in cash for fees earned previously.
(g) Paid $1,500 to creditors on account.
(h) Paid wages of $6,250.
(i) Received $7,150 from customers on account.
(j) A. Allen withdrawal of $2,000.

Question 78

What are interim financial statements?

Question 79

Journalize, in proper form, the following transactions that occurred during September. Omit explanations.
June

Question 80

Prepare in proper form journal entries for the following transactions. Omit explanations.
December
2 Owner made a cash investment into the company $2,500
6 Bought supplies on account $100.
10 Paid salaries, $700
16 Paid for supplies purchased on December 6
21 Received company telephone bill, to be paid later, $50