Deck 2: The Recording Process

Question 1

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Answer 1

False

Question 2

The chart of accounts is a special ledger used in accounting systems.

Answer 2

False

Question 3

An account is a part of the financial information system and is described by all of the following statements except:

A)An account has a debit and credit side.
B)An account is a source document.
C)An account may be part of a manual or a computerized accounting system.
D)An account has a title.

Answer 3

B

Question 4

Which of the following is not true of the terms debit and credit?

A)They can be abbreviated as Dr.and Cr.
B)They can be interpreted to mean increase and decrease.
C)They can be used to describe the balance of an account.
D)They can be interpreted to mean left and right.

Question 5

On June 1, 2021, Portugal Inc.reported a cash balance of $12,000.During June, Portugal made deposits of $5,000 and made disbursements totalling $14,000.What is the cash balance at the end of June?

A)$3,000 debit balance
B)$17,000 debit balance
C)$3,000 credit balance
D)$2,000 credit balance

Question 6

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

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

Question 7

On June 1, 2021 Ted Leo buys a copier machine for his business and finances this purchase with cash and a note.When journalizing this transaction, he will

A)use two journal entries.
B)make a compound entry.
C)make a simple entry.
D)list the credit entries first, which is proper form for this type of transaction.

Question 8

A number in the reference column in a general journal indicates

A)that the entry has been posted to a particular account.
B)the page number of the journal.
C)the dollar amount of the transaction.
D)the date of the transaction.

Question 9

Which of the following statements is false?

A)Revenues increase stockholders' equity.
B)Revenues have normal credit balances.
C)Revenues are a positive factor in the computation of net income.
D)Revenues are increased by debits.

Question 10

At June 1, 2021, Coquehcot Industries had an accounts receivable balance of $12,000.During the month, the company performed services on account of $30,000 and collected accounts receivable of $22,000.What is the balance in accounts receivable at June 30, 2021?

Question 11

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

Question 12

A general ledger should be arranged in the order in which accounts are presented in the financial statements, beginning with the balance sheet accounts.

Question 13

The right side of an account

A)is the correct side.
B)reflects all transactions for the accounting period.
C)shows all the balances of the accounts in the system.
D)is the credit side.

Question 14

An account will have a credit balance if the

A)credits exceed the debits.
B)first transaction entered was a credit.
C)debits exceed the credits.
D)last transaction entered was a credit.

Question 15

At January 1, 2021, Alligator Industries reported retained earnings of $150,000.During 2021, Alligator had a net loss of $30,000 and paid dividends of $15,000.At December 31, 2021, the balance of retained earnings is

A)$105,000.
B)$120,000.
C)$135,000.
D)$165,000.

Question 16

The first step in the recording process is to

A)prepare financial statements.
B)analyze each transaction for its effect on the accounts.
C)post to a journal.
D)prepare a trial balance.

Question 17

Which of the following journal entries is recorded correctly and in the standard format?

Question 18

A chart of accounts for a business firm

A)is a graph.
B)indicates the amount of profit or loss for the period.
C)lists the accounts and account numbers that identify their location in the ledger.
D)shows the balance of each account in the general ledger.

Question 19

Which of the following is the correct sequence of steps in the recording process?

A)Posting, journalizing, analyzing
B)Journalizing, analyzing, posting
C)Analyzing, posting, journalizing
D)Analyzing, journalizing, posting

Question 20

TNT Company has the following transactions during April of the current year.Indicate
(a) the effect on the accounting equation and (b) the debit-credit analysis.
Apr.1 Opens a law office, investing $25,000 in cash.
4 Pays rent in advance for 6 months, $9,000 cash.
16 Receives $8,000 from clients for services provided.
27 Pays secretary $2,800 salary.

Question 21

The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.

Question 22

The number and types of accounts used by different business enterprises are the same if generally accepted accounting principles are being followed by the enterprises.

Question 23

An account consists of

A)a title, a debit balance, and a credit balance.
B)a title, a left side, and a debit balance.
C)a title, a debit side, and a credit side.
D)a title, a right side, and a debit balance.

Question 24

For the basic accounting equation to stay in balance, each transaction recorded must

A)affect two or less accounts.
B)affect two or more accounts.
C)always affect exactly two accounts.
D)affect the same number of asset and liability accounts.

Question 25

Mt.Zion Inc.pays its employees twice a month, on the 7th and the 21st.On June 21, Mt.Zion Inc.paid employee salaries of $5,000.This transaction would

A)increase stockholders' equity by $5,000.
B)decrease the balance in Salaries and Wages Expense by $5,000.
C)decrease net income for the month by $5,000.
D)be recorded by a $5,000 debit to Salaries and Wages Payable and a $4,000 credit to Salaries and Wages Expense.

Question 26

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

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

Question 27

The ledger should be arranged in

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

Question 28

Posting

A)should be performed in account number order.
B)accumulates the effects of journalized transactions in the individual accounts.
C)involves transferring all debits and credits on a journal page to the trial balance.
D)is accomplished by examining ledger accounts and seeing which ones need updating.

Question 29

Which of the following is false about a journal?

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 30

For each of the following accounts indicate the effect of a debit or a credit on the account and the normal balance.Increase (+), Decrease (-).

Question 31

Revenues are a subdivision of retained earnings.

Question 32

Posting is the process of proving the equality of debits and credits in the trial balance.

Question 33

A T-account is

A)a way of depicting the basic form of an account.
B)what the computer uses to organize bytes of information.
C)a special account used instead of a trial balance.
D)used for accounts that have both a debit and credit balance.

Question 34

Which of the following statements is true?

A)Debits increase assets and increase liabilities.
B)Credits decrease assets and decrease liabilities.
C)Credits decrease assets and increase liabilities.
D)Debits decrease liabilities and decrease assets.

Question 35

In the first month of operations for Gallowsbird Industries, the total of the debit entries to the cash account amounted to $36,000 ($16,000 investment by stockholders and revenues of $20,000).The total of the credit entries to the cash account amounted to $22,000 (purchase of equipment $8,000 and payment of expenses $14,000).At the end of the month, the cash account has a(n)

A)$6,000 credit balance.
B)$6,000 debit balance.
C)$14,000 debit balance.
D)$14,000 credit balance.

Question 36

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

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

Question 37

The entire group of accounts and their balances maintained by a company is called the

A)chart of accounts.
B)general journal.
C)general ledger.
D)trial balance.

Question 38

After journal entries are posted, the reference column

A)of the general journal will be blank.
B)of the general ledger will show journal page numbers.
C)of the general journal will show "Dr" or "Cr".
D)of the general ledger will show account numbers.

Question 39

Deerhoof Company purchases equipment for $2,700 and supplies for $400 from Milkman Co.for $3,100 cash.The entry for this transaction will include a

A)debit to Equipment $2,700 and a debit to Supplies Expense $400 for Milkman.
B)credit to Cash for Milkman.
C)credit to Accounts Payable for Deerhoof.
D)debit to Equipment $2,700 and a debit to Supplies $400 for Deerhoof.

Question 40

The transactions of the Liberty Belle Store are recorded in the general journal below.You are to post the journal entries to T-accounts.Liberty Belle is in their first period of operations.

Question 41

Under the double-entry system, revenues must always equal expenses.

Question 42

After a transaction has been posted, the reference column in the journal should not be blank.

Question 43

Credits

A)decrease both assets and liabilities.
B)decrease assets and increase liabilities.
C)increase both assets and liabilities.
D)increase assets and decrease liabilities.

Question 44

Assets normally show

A)credit balances.
B)debit balances.
C)debit and credit balances.
D)debit or credit balances.

Question 45

Chik Chik Company showed the following balances at the end of its first year: What did Chik Chik Company show as total credits on its trial balance?

A)$51,400
B)$60,800
C)$62,200
D)$70,200

Question 46

The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the

A)journal, and transfer the information to the ledger accounts.
B)ledger, and transfer the information to the journal.
C)book of accounts, and transfer the information to the journal.
D)book of original entry, and transfer the information to the journal.

Question 47

An accounting record of the balances of all assets, liabilities, and stockholders' equity accounts is called a

A)compound entry.
B)general journal.
C)general ledger.
D)chart of accounts.

Question 48

The explanation column of the general ledger

A)is completed without exception.
B)is nonexistent.
C)is used infrequently.
D)shows account titles.

Question 49

Devendra Company pays cash dividends of $600.The entry for this transaction will include a debit of $600 to

A)Dividends.
B)Retained Earnings.
C)Owner's Salaries Expense.
D)Salaries and Wages Expense.

Question 50

Prepare a trial balance from the ledger accounts of Black Diamond Express as of January 31, 2021.

Question 51

Transactions are entered in the ledger first and then they are analyzed in terms of their effect on the accounts.

Question 52

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

Question 53

A debit to an asset account indicates

A)an error.
B)a credit was made to a liability account.
C)a decrease in the asset.
D)an increase in the asset.

Question 54

An awareness of the normal balances of accounts would help you spot which of the following as an error in recording?

A)A debit balance in the dividends account
B)A credit balance in an expense account
C)A credit balance in a liabilities account
D)A credit balance in a revenue account

Question 55

Electrelane Company showed the following balances at the end of its first year: What did Electrelane Company show as total credits on its trial balance?

A)$9,000
B)$44,000
C)$45,000
D)$49,000

Question 56

The final step in the recording process is to transfer the journal information to the

A)trial balance.
B)financial statements.
C)ledger.
D)file cabinets.

Question 57

The usual order of accounts in the general ledger is

A)assets, liabilities, common stock, retained earnings, dividends, revenues, and expenses.
B)assets, liabilities, dividends, common stock, retained earnings, expenses, and revenues.
C)liabilities, assets, common stock, retained earnings, revenues, expenses, and dividends.
D)common stock, retained earnings, assets, liabilities, dividends, expenses, and revenues.

Question 58

A numbering system for a chart of accounts

A)is prescribed by GAAP.
B)is uniform for all businesses.
C)usually starts with income statement accounts.
D)usually starts with balance sheet accounts.

Question 59

On October 3, Karl Schickele, a carpenter, received a cash payment for services previously billed to a client.Karl paid his telephone bill and also bought equipment on account.For the three transactions, at least one of the entries will include a

A)credit to Retained Earnings.
B)credit to Notes Payable.
C)debit to Accounts Receivable.
D)credit to Accounts Payable.

Question 60

Prepare a corrected trial balance for Stereolab Company.All accounts should have a normal balance.

Question 61

Business documents can provide evidence that a transaction has occurred.

Question 62

The double-entry system is a logical method for recording transactions and results in equal debits and credits for each transaction.

Question 63

The normal balance of any account is the

A)left side.
B)right side.
C)side which increases that account.
D)side which decreases that account.

Question 64

If a company has overdrawn its bank balance, then

A)its cash account will show a debit balance.
B)its cash account will show a credit balance.
C)the cash account debits will exceed the cash account credits.
D)it cannot be detected by observing the balance of the cash account.

Question 65

During February 2021, its first month of operations, the stockholders of Ariel Pink Enterprises invested cash of $50,000.Ariel had cash revenues of $10,000 and paid expenses of $14,000.Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

A)$4,000 credit
B)$4,000 debit
C)$46,000 debit
D)$54,000 debit

Question 66

The recording process occurs

A)once a year.
B)once a month.
C)repeatedly during the accounting period.
D)infrequently in a manual accounting system.

Question 67

Management could determine the amounts due from customers by examining which ledger account?

A)Service Revenue
B)Accounts Payable
C)Accounts Receivable
D)Supplies

Question 68

The steps in preparing a trial balance include all of the following except

A)listing the account titles and their balances.
B)totaling the debit and credit columns.
C)proving the equality of the two columns.
D)transferring journal amounts to ledger accounts.

Question 69

Posting of journal entries should be done in

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

Question 70

The chart of accounts used by Notwist Copy Company is listed below.You are to indicate the proper accounts to 1.

Question 71

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

Question 72

The normal balance of an expense account is a credit.

Question 73

The double-entry system requires that each transaction must be recorded

A)in at least two different accounts.
B)in two sets of books.
C)in a journal and in a ledger.
D)first as a revenue and then as an expense.

Question 74

Which of the accounts listed below is not a subdivision of retained earnings?

A)Dividends
B)Revenues
C)Expenses
D)Common stock

Question 75

At January 31, 2021, the balance in Aislers Inc.'s supplies account was $750.During February, Aislers purchased supplies of $900 and used supplies of $1,125.At the end of
February, the balance in the supplies account should be

A)$525 debit.
B)$975 debit.
C)$525 credit.
D)$775 debit.

Question 76

A compound journal entry involves

A)two accounts.
B)three accounts only.
C)three or more accounts.
D)four or more accounts.

Question 77

The ledger accounts should be arranged in

A)chronological order.
B)alphabetical order.
C)financial statement order.
D)order of appearance in the journal.

Question 78

A trial balance may balance even when each of the following occurs except when

A)a transaction is not journalized.
B)a journal entry is posted twice.
C)incorrect accounts are used in journalizing.
D)a transposition error is made.

Question 79

The chart of accounts is a

A)list of accounts and their balances at a given time.
B)device used to prove the mathematical accuracy of the ledger.
C)listing of the accounts and the account numbers which identify their location in the ledger.
D)required step in the recording process.

Question 80

Under a double-entry system, show how the entry in each statement is entered in the ledger by using debit or credit to indicate the increase or decrease in the affected account.