Deck 4: Record-Keeping

Question 1

Which of the following is an internal transaction?

A) payments of dividend to shareholders
B) loan to a director
C) amortisation of goodwill
D) credit purchase of machinery.

Answer 1

C

Question 2

Which of the following statements about a purchase order is NOT true?

A) A purchase order is dated and prenumbered.
B) A purchase order is recorded in the accounts.
C) A purchase order's documentation is important.
D) A purchase order is a source of evidence for auditors.

Answer 2

B

Question 3

Which of the following is NOT an example of an accounting transaction?

A) A salesman disappears with a company vehicle and merchandise.
B) The bank charges interest on a loan.
C) A customer settles an account by undertaking delivery work for the business.
D) A purchase order for inventory from a supplier is sent.

Answer 3

D

Question 4

Identify the correct classification for the following 5 ledger accounts in the chart of accounts:

Question 5

Which of the following is NOT a source document?

A) invoice
B) cheque butt
C) goods received advice
D) journal entry.

Question 6

Accumulated depreciation on computer:

A) asset
B) liability
C) shareholders' equity
D) expense.

Question 7

Identify the correct classification for the following 4 ledger accounts in the chart of accounts:

Question 8

What source document supports the provision of services on credit?

A) supplier's invoice received by the business
B) cheque duplicate
C) cash receipt
D) invoice sent by the business to a customer.

Question 9

Which of the following is an example of an accounting transaction?

A) A bank overdraft limit of $500 000 is arranged with the bank manager.
B) An accountant is hired at an annual salary of $80 000.
C) The company is awarded a contract to build a bridge,with construction to commence in 12 months' time.
D) The payroll department issues a cheque to pay an employee.

Question 10

Amortisation of goodwill:

A) asset
B) liability
C) shareholders' equity
D) expense.

Question 11

The following are steps in the accounting cycle:

Question 12

A chart of accounts is:

A) a depiction of the significant and formal relationships and roles within a business organisation
B) a list,in some logical form,of all relevant transactions in a business organisation
C) a list,in chronological order,of journal accounts used in an accounting system
D) a list of the complete set of account titles and their related reference numbers.

Question 13

adjusting journal entries

Question 14

Fees receivable:

A) asset
B) liability
C) shareholders' equity
D) revenue.

Question 15

post-closing trial balance

Question 16

A chart of accounts is:

A) a means of ensuring that the debits equal the credits
B) a chronological record of all transactions
C) a list of the titles of all accounts in the ledger,together with an appropriate numbering system for the accounts
D) a trial balance.

Question 17

Which of the following is NOT a source document of a business enterprise?

A) trial balance
B) purchase order
C) list of day's collections
D) cheque duplicate.

Question 18

Ledgers

Question 19

What is the source document to support the sale of goods on credit?

A) a copy of a credit note issued by the vendor
B) a copy of an invoice issued by the vendor
C) the credit note issued by the purchaser
D) the invoice issued by the purchaser.

Question 20

source documents

Question 21

financial statements

Question 22

Prepaid insurance:

A) asset
B) liability
C) shareholders' equity
D) expense.

Question 23

pre-closing trial balance

Question 24

In which order are the following steps in the accounting cycle performed at the end of the accounting period?

Question 25

Journals

Question 26

Which of the following is NOT an accounting transaction?

A) A payment is made by cheque to Telstra.
B) A company is awarded a construction contract.
C) A creditor charges interest for late payment.
D) The bank informs you that a cheque has been dishonoured.

Question 27

closing journal entries

Question 28

Which of the following is an accounting transaction?

A) making a purchase order
B) establishing a bank overdraft
C) hiring a new staff member
D) signing a new contract.

Question 29

adjusted trial balance. What is the order that is normally followed?

A) 4,7,3,6,1,9,2,8,5
B) 4,7,3,6,8,9,1,2,5
C) 4,7,3,6,1,9,8,2,5
D) none of the above.

Question 30

Dividend payable:

A) asset
B) liability
C) shareholders' equity
D) expense.

Question 31

The journal entry for the receipt of cash from accounts receivable is:

A) DR Cash
CR Sales revenue
B) DR Accounts receivable
CR Sales revenue
C) DR Cash
CR Accounts receivable
D) DR Sales
CR Accounts receivable

Question 32

Prepare financial statements.

Question 33

Which transaction represents a customer settling his/her account?

A) (5A)
B) (6A)
C) (7)
D) (8).

Question 34

A record in a journal is described as a(n):

A) summary
B) posting
C) entry
D) transaction.

Question 35

Prepare a post-closing trial balance.

Question 36

Prepare and post the following journal entry:
DR Insurance expense
CR Prepaid insurance.

Question 37

When a company orders goods for resale,what is the accounting entry?

A) DR Inventory
CR Accounts payable
B) DR Purchases
CR Accounts payable
C) DR Accounts receivable
CR Accounts payable
D) No accounting entry is required yet.

Question 38

Prepare and post the following journal entry:
DR Sales revenue
CR Profit and loss summary.

Question 39

Scoot Ltd paid a supplier $240 and received a cash discount of $6.Scoot Ltd's journal entry will include:

A) DR Discount allowed,$6
B) DR Cash,$240
C) DR Accounts payable,$246
D) CR Purchases,$246

Question 40

Inventory of $100 000 was purchased on credit.The journal entry is:

A) DR Inventory
CR Cash
B) DR Inventory
CR Accounts payable
C) DR Accounts payable
CR Inventory
D) DR Inventory
CR Accrued expenses

Question 41

Prepare an unadjusted trial balance.

Question 42

Prepare an adjusted trial balance.

A) 5,3,6,4,2,1
B) 5,3,6,4,1,2
C) 5,4,6,3,2,1
D) 5,3,6,2,1,4.

Question 43

What does transaction (2)represent?

A) sale of inventory on credit
B) sale of inventory for cash
C) purchase of inventory on credit
D) purchase of inventory for cash.

Question 44

Dawes Pty Ltd purchased plant for $7000,paying $1000 cash and giving a 12-month promissory note for the balance.The transaction would be recorded as:

A) DR Plant
CR Cash
B) DR Plant
CR Cash
CR Note payable
C) DR Plant
CR Note payable
D) DR Note receivable
CR Cash
CR Plant

Question 45

The purpose of ledgers is to:

A) provide a chronological record of transactions
B) keep track of the large number of transactions that occur
C) maintain a cumulative record of profit as it is earned
D) make sure that the sum of the debit balances equals the sum of the credit balances.

Question 46

An account from a painter for work completed on the office was received.The bill is due to be paid next month.The journal entry is:

A) DR Accounts payable
CR Repairs and maintenance expense
B) DR Accounts payable
CR Prepaid expenses
C) DR Repairs and maintenance expense
CR Accounts payable
D) No entry is required at this stage.

Question 47

Mr and Mrs Dawes formed Dawes Pty Ltd,each investing $1000 as capital.Dawes Pty Ltd should record these transactions as:

A) DR Share capital
CR Cash
B) DR Cash
CR Share capital
C) DR Cash
CR Loan
D) DR Investment
CR Capital

Question 48

On 30 June,Dawes Pty Ltd receives an account for TV advertising for the month of June.It is not due for payment until August.The transaction would be recorded as:

A) DR Expenses payable
CR Advertising expense
B) DR Advertising expense
CR Prepaid expenses
C) DR Prepaid expenses
CR Expenses payable
D) DR Advertising expense
CR Expenses payable

Question 49

Dawes Pty Ltd received its monthly bank statement showing bank charges of $20.The transaction should be recorded as:

A) DR Cash
CR Bank charges
B) DR Accounts payable
CR Cash
C) DR Bank charges
CR Cash
D) No record is necessary.

Question 50

A set of accounts is called a:

A) trial balance
B) Spreadsheet
C) general ledger
D) balance sheet.

Question 51

Supplies purchased on account were incorrectly recorded as office equipment.The correct entry would be:

A) DR Supplies
CR Office equipment
B) DR Accounts payable
CR Supplies
C) DR Office equipment
CR Supplies
D) DR Supplies
CR Accounts payable

Question 52

prepayments

Question 53

The bank notifies the company of fees for the month already taken out of the company's bank account.The transaction should be recorded as:

A) DR Bank charges
CR Accounts payable
B) DR Bank charges
CR Expenses payable
C) DR Bank charges
CR Cash
D) No entry is required.

Question 54

municipal rates

Question 55

Merchandise purchased by Dawes Pty Ltd on credit for $1500 was returned,as it had been damaged in transit.The transaction would be recorded by Dawes Pty Ltd as:

A) DR Inventory
CR Accounts payable
B) DR Accounts payable
CR Inventory
C) DR Cost of goods sold
CR Inventory
D) DR Accounts payable
CR Cost of goods sold

Question 56

depreciation

Question 57

Which transaction is an accrual accounting end-of-period adjustment?

A) (7)
B) (8)
C) (9)
D) (10).

Question 58

accumulated depreciation

Question 59

Dawes Pty Ltd borrowed $10 000 from a finance company,promising to repay the debt in 3 years' time,together with interest at 12% p.a.Dawes Pty Ltd should record this transaction as:

A) DR Cash
CR Loan
CR Interest payable
B) DR Loan
CR Cash
C) DR Cash
DR Interest expense
CR Loan
D) DR Cash
CR Loan

Question 60

accrued expenses.

A) 1 asset,2 expense,3 expense,4 asset,5 expense
B) 1 asset,2 expense,3 asset,4 expense,5 liability
C) 1 asset,2 expense,3 expense,4 asset,5 liability
D) 1 expense,2 expense,3 expense,4 expense,5 expense.

Question 61

Which of the following is NOT true of journal entries?

A) The sum of the debits equals the sum of the credits.
B) Journal entries are posted to the general ledger.
C) A trial balance of all journal entries and their balances is prepared periodically.
D) Journal entries are considered books of original entry.

Question 62

Which of the statements about closing the accounts is NOT true?

A) Revenue accounts are debited.
B) A net profit is credited to the retained profits account.
C) Expense accounts are reset at zero.
D) Dividends received are credited.

Question 63

prepaid insurance

Question 64

Which of the following errors will be detectable by a trial balance?

A) a revenue incorrectly posted to the ledger as a liability
B) failure to record a journal entry
C) a purchase of inventory posted twice to the general ledger
D) an addition error in a ledger account.

Question 65

accrued wages

Question 66

The total of the debit column of the trial balance exceeds that of the credit column by $27.Which of the following errors could NOT have caused this?

A) a credit of $13.50 inadvertently posted to the debit of the account concerned
B) an item of $27 debited,but not credited to any account
C) omission of a credit purchase of $27 from the journal
D) in posting a transaction to the ledger,the credit was correctly recorded as $36,but the debit was recorded as $63.

Question 67

Depreciation

Question 68

Which of the following accounts are not closed off at balance date?

A) revenue
B) profit and loss summary
C) dividend declared
D) accounts payable.

Question 69

cost of goods sold

A) 1 expense,2 liability,3 expense,4 expense
B) 1 asset,2 liability,3 expense,4 expense
C) 1 asset,2 liability,3 expense,4 asset
D) 1 asset,2 liability,3 liability,4 revenue.

Question 70

Which transaction represents payment for an expense item?

A) (4)
B) (10)
C) (5)
D) none of the above.

Question 71

Which of the following may cause the sum of the debit column of a trial balance to differ from the sum of the credit column?

A) posting the same wrong amount to both sides of the right accounts
B) posting an amount to the wrong side of the right account
C) posting an amount to the right side of the wrong account
D) reversing the postings,i.e.,debiting the account that should have been credited and crediting the account that should have been debited.

Question 72

What does transaction (2)represent?

A) purchase of inventory on credit
B) purchase of inventory for cash
C) sale of inventory on credit
D) sale of inventory for cash.

Question 73

A trial balance would detect which of the following errors?

A) failure to record depreciation for the year
B) a credit purchase recorded in accounts payable account as $927 instead of $972
C) a cash purchase of inventory recorded as a debit to plant and a credit to accounts payable
D) a salesman failing to record a cash sale,and retaining the proceeds.

Question 74

What is the closing balance of inventory?

A) $120 000
B) $140 000
C) $200 000
D) $260 000.

Question 75

Which of the following errors,each considered individually,would cause the trial balance totals to be unequal?

A) A transaction was not posted.
B) A payment of $64 for supplies was posted as a debit of $46 to Supplies and a credit of $46 to cash.
C) A payment of $131 to a creditor was posted as a debit of $131 to accounts payable and a debit of $131 to accounts receivable.
D) Cash received from customers on account was posted as a debit of $240 to cash and a credit of $240 to accounts payable.

Question 76

What do transactions (6A)and (6B)represent?

A) sale of goods on credit and later collection of cash
B) sale of goods on credit and for cash
C) receipt of cash and purchase of inventory
D) sale of goods for cash.

Question 77

What is the closing balance of Bank?

A) $100 000
B) $131 500
C) $170 000
D) $208 500.

Question 78

Which transaction represents the acquisition of a noncurrent asset?

A) (2)
B) (4)
C) (9)
D) (10).

Question 79

Which of the following statements about closing the accounts is NOT true?

A) Revenue accounts are debited.
B) Depreciation account is credited.
C) A net loss is credited to the retained profits account.
D) Income accounts are debited.
I

Question 80

Which of the following statements about a trial balance is NOT true?

A) A trial balance is one of the financial statements provided to shareholders at the close of the financial period.
B) A trial balance may be prepared at any time to ensure that the debits equal the credits.
C) The sum of the debits is not necessarily the same as the total of the assets side of the balance sheet.
D) None of the above is correct.All statements are true