Question 1

Ignoring GST, which of the following entries correctly records the purchase of land for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20-year, 6% loan?

Accepted Answer

A)  DR Land $100 000; CR Bank $100 000 
B)  DR Land $300 000; CR Bank $300 000 
C)  DR Land $300 000; CR Bank $100 000; CR Loan $200 000 
D)  DR Land $300 000; CR Loan $300 000

Question 2

There are three basic types of balance sheet accounts. They are:

Accepted Answer

A)  income, expense and drawings. 
B)  asset, expense and equity 
C)  asset, liability and equity. 
D)  bank, debtors and creditors.

Question 3

The transactions below are from the records of Cornerstone Framing. The internal transaction is:

Accepted Answer

A)  cash sale. 
B)  recorded depreciation on shop fixtures and fittings. 
C)  credit sale. 
D)  paid monthly rent on premises.

Question 4

Select the account types for these items:
$\bullet$Fixtures and fittings
$\bullet$Accounts payable
$\bullet$Drawings
$\bullet$Sales

Accepted Answer

A)  Asset, liability, equity, income 
B)  Asset, liability, equity, expenses 
C)  Expense, asset, equity, income 
D)  Expense, liability, asset, expense

Question 5

The source document for a credit sale is a:

Accepted Answer

A)  credit note 
B)  receipt 
C)  cheque 
D)  tax invoice

Question 6

Charming Pete requires his customers to pay for their orders two weeks before shipping the goods. Pete will record the cash receipts as:

Accepted Answer

A)  DR Bank, CR asset account 
B)  DR Bank, CR expense account 
C)  DR Bank, CR liability account 
D)  DR Bank, CR income account

Question 7

The payroll officer recorded wages for the month as a debit to the Sales account rather
Than as a debit to wages expense. This error will result in:

Accepted Answer

A)  understated liabilities at the end of the period. 
B)  overstated expenses at the end of the period. 
C)  overstated profit for the period. 
D)  no effect on profit of the period.

Question 8

A trial balance is prepared to:

Accepted Answer

A)  act as a link between the journal and the ledger. 
B)  determine profit or loss. 
C)  act as an index to the journal. 
D)  verify the equality of debit and credit postings in the ledger.

Question 9

Johanna's Hair Studio paid $300 for advertising during the month using Cheque No. 100558. Ignore GST. Which of the following reflects the effect on the accounting equation?

Accepted Answer

A)  Decrease in equity of $300; increase in assets of $300. 
B)  Increase in assets of $300; increase in liabilities of $300. 
C)  Decrease in assets of $300; increase in equity of $300. 
D)  Decrease in equity of $300; decrease in assets of $300.

Question 10

A chart of accounts is a:

Accepted Answer

A)  formal plan developed by management to estimate information flows through the computerised system. 
B)  listing of the ledger account titles and their account numbers. 
C)  list of accounts receivable and payable. 
D)  chart showing the organisational structure of the entity.

Question 11

A two-year insurance policy paid for on l July would initially be recorded in an asset account called:

Accepted Answer

A)  debtors. 
B)  prepaid insurance. 
C)  insurance payable. 
D)  unearned insurance.

Question 12

A credit entry will:

Accepted Answer

A)  decrease an asset, increase a liability, and decrease equity. 
B)  increase an asset, decrease a liability, and decrease equity. 
C)  decrease an expense, increase income, and increase equity. 
D)  decrease an asset, decrease a liability, and increase equity.

Question 13

A party to whom the entity owes money for the provision of goods or services is called a:

Accepted Answer

A)  creditor. 
B)  client. 
C)  debtor. 
D)  customer.

Question 14

The correct accounting entry to record the payment of a liability is:

Accepted Answer

A)  DR asset account; CR liability account 
B)  DR equity account; CR liability account 
C)  DR liability account; CR equity account 
D)  DR liability account; CR asset account

Question 15

A __________________ provides a complete record, in one place, of each transaction in date order.

Accepted Answer

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

Question 16

Which statement relating to the general journal is incorrect?

Accepted Answer

A)  The debit and credit effects of each transaction are recorded together. 
B)  It provides a record of transactions in chronological order. 
C)  It is compiled using the information taken from the entity's general ledger. 
D)  It is referred to as a book of original entry.

Question 17

Which statement relating to a trial balance is incorrect?

Accepted Answer

A)  A trial balance may be prepared at any time to test the equality of debits and credits in the ledger. 
B)  The fact that the total of the debit column equals the total of the credit column does not guarantee that the ledger if free from errors. 
C)  A trial balance reports the financial performance of an entity. 
D)  A trial balance is a list of all the accounts in the ledger with their current balances.

Question 18

The source document for a cash sale could be a:

Accepted Answer

A)  credit note. 
B)  cheque butt. 
C)  credit card slip. 
D)  purchase order.

Question 19

Which of the following statements is correct?

Accepted Answer

A)  Income and expenses are recorded net of GST. 
B)  Journal entries to record GST are regarded as internal transactions. 
C)  The account, GST Payable, represents the amount of GST payable to the entity's suppliers. 
D)  If the GST inclusive price of inventory is $120 the GST component is $12.

Question 20

A chronological record of all the transactions of an entity is provided in the:

Accepted Answer

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

Exam 3: Recording Transactions

Ignoring GST, which of the following entries correctly records the purchase of land for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20-year, 6% loan?

There are three basic types of balance sheet accounts. They are:

The transactions below are from the records of Cornerstone Framing. The internal transaction is:

Select the account types for these items: $\bullet$ Fixtures and fittings $\bullet$ Accounts payable $\bullet$ Drawings $\bullet$ Sales

The source document for a credit sale is a:

Charming Pete requires his customers to pay for their orders two weeks before shipping the goods. Pete will record the cash receipts as:

The payroll officer recorded wages for the month as a debit to the Sales account rather Than as a debit to wages expense. This error will result in:

A trial balance is prepared to:

Johanna's Hair Studio paid $300 for advertising during the month using Cheque No. 100558. Ignore GST. Which of the following reflects the effect on the accounting equation?

A chart of accounts is a:

A two-year insurance policy paid for on l July would initially be recorded in an asset account called:

A credit entry will:

A party to whom the entity owes money for the provision of goods or services is called a:

The correct accounting entry to record the payment of a liability is:

A __________________ provides a complete record, in one place, of each transaction in date order.

Which statement relating to the general journal is incorrect?

Which statement relating to a trial balance is incorrect?

The source document for a cash sale could be a:

Which of the following statements is correct?

A chronological record of all the transactions of an entity is provided in the:

Exam 3: Recording Transactions

Ignoring GST, which of the following entries correctly records the purchase of land for $300 000 financed by a $100 000 cash deposit with the balance payable via a 20-year, 6% loan?

There are three basic types of balance sheet accounts. They are:

The transactions below are from the records of Cornerstone Framing. The internal transaction is:

Select the account types for these items: ∙\bullet∙ Fixtures and fittings ∙\bullet∙ Accounts payable ∙\bullet∙ Drawings ∙\bullet∙ Sales

The source document for a credit sale is a:

Charming Pete requires his customers to pay for their orders two weeks before shipping the goods. Pete will record the cash receipts as:

The payroll officer recorded wages for the month as a debit to the Sales account rather Than as a debit to wages expense. This error will result in:

A trial balance is prepared to:

Johanna's Hair Studio paid $300 for advertising during the month using Cheque No. 100558. Ignore GST. Which of the following reflects the effect on the accounting equation?

A chart of accounts is a:

A two-year insurance policy paid for on l July would initially be recorded in an asset account called:

A credit entry will:

A party to whom the entity owes money for the provision of goods or services is called a:

The correct accounting entry to record the payment of a liability is:

A __________________ provides a complete record, in one place, of each transaction in date order.

Which statement relating to the general journal is incorrect?

Which statement relating to a trial balance is incorrect?

The source document for a cash sale could be a:

Which of the following statements is correct?

A chronological record of all the transactions of an entity is provided in the:

Select the account types for these items: $\bullet$ Fixtures and fittings $\bullet$ Accounts payable $\bullet$ Drawings $\bullet$ Sales