Question 1

Which of the following accounts does NOT appear on a post-closing trial balance?

Accepted Answer

A)   Prepayments
B)   Wages expense
C)   Accumulated depreciation
D)   Retained profits B

Question 2

The following accounts were taken from the trial balance:  Net profit for the period is:

Accepted Answer

A)   $10 000.
B)   $11 000.
C)   $12 000.
D)   $12 500. B

Question 3

The following are steps in the accounting cycle:  What is the order that is normally followed?

Accepted Answer

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

Question 4

Which of the following is NOT an accounting transaction?

Accepted Answer

A)   A payment is made to a telecommunications company.
B)   The company is awarded a contract to build a bridge, with construction to commence in three months' time.
C)   A creditor charges interest for late payment.
D)   The payroll department pays an employee for holiday pay.

Question 5

Greening Ltd is a newly established business selling computer hardware. Shown below are ledger accounts in T-account form, with entries made for the first month of operations.  What does transaction (2) represent?

Accepted Answer

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 6

If the two totals of a trial balance are not equal, it could be due to:

Accepted Answer

A)   failure to record a transaction.
B)   recording the same erroneous amount for both the debit and the credit parts of a transaction.
C)   an error in determining the account balances, such as an incorrectly computed balance.
D)   a transaction was not posted.

Question 7

The bank notifies the company of fees for the month already taken out of the company's bank account. The CR entry would be:

Accepted Answer

A)   CR Accounts payable
B)   CR Expenses payable
C)   CR Cash
D)   CR Bank charges

Question 8

Greening Ltd is a newly established business selling computer hardware. Shown below are ledger accounts in T-account form, with entries made for the first month of operations.  Which transaction represents payment for an expense item?

Accepted Answer

A)   (4) 
B)   (5) 
C)   (10) 
D)   (8)

Question 9

An invoice from a painter for work completed on the office was received. The payment is due next month. The journal entry is:

Accepted Answer

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

Question 10

A trial balance would detect which of the following errors?

Accepted Answer

A)   Failure to record depreciation for the year
B)   A cash purchase of inventory recorded as a debit to Plant and a credit to Accounts payable
C)   A salesman failing to record a cash sale, and retaining the proceeds
D)   An addition error in a ledger account

Question 11

Brownlee Ltd is a newly established retail store selling plumbing hardware. Shown below are ledger accounts in T-account form, with entries made for the first three months of business.  What do transactions (6A) and (6B) represent?

Accepted Answer

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 12

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

Accepted Answer

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)   None of the above

Question 13

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

Accepted Answer

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 14

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:

Accepted Answer

A)   DR Accounts payableCR Advertising expense
B)   DR Advertising expenseCR Prepaid expenses
C)   DR Prepaid expensesCR Accounts payable
D)   DR Advertising expenseCR Accounts payable

Question 15

Identify the correct classification for the following four ledger accounts:

Accepted Answer

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

Question 16

Brownlee Ltd is a newly established retail store selling plumbing hardware. Shown below are ledger accounts in T-account form, with entries made for the first three months of business.  Which transaction represents a customer paying his/her account?

Accepted Answer

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

Question 17

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

Accepted Answer

A)   The same transaction was recorded more than once.
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 18

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?

Accepted Answer

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)   An asset recorded as an expense

Question 19

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

Accepted Answer

A)   DR SuppliesCR Office equipment
B)   DR Accounts payableCR Supplies
C)   DR Office equipmentCR Supplies
D)   DR SuppliesCR Accounts payable

Question 20

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

Accepted Answer

A)   DR CashCR Accounts payable
B)   DR PurchasesCR Accounts payable
C)   DR InventoryCR Accounts payable
D)   No accounting entry is required yet

Exam 4: Record-Keeping