Deck 4: Record-Keeping

Question 1

Supplies purchased on account were incorrectly recorded as office equipment. The correcting 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

Answer 1

A

Question 2

Which of the following is NOT an accounting transaction?

A) A payment is made by cheque to Telstra.
B) The company is awarded a contract to build a bridge, with construction to commence in 12 months' time.
C) A creditor charges interest for late payment.
D) The payroll department issues a cheque to pay an employee.

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 is sent to a supplier.

Answer 3

D

Question 4

Which of the following is an internal transaction?

A) Payment of dividends to shareholders
B) Loan to a director
C) Depreciation of equipment
D) Purchase of machinery on credit

Question 5

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 6

The following are steps in the accounting cycle:

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 7

Which of the following is an accounting transaction?

A) Make a purchase order.
B) Establish a bank overdraft.
C) Hire a new staff member.
D) Sign a new contract.

Question 8

Identify the correct classification for the following five ledger accounts:

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 9

Identify the correct classification for the following four ledger accounts:

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

Question 10

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

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 11

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

A) Trial balance
B) Purchase order
C) List of the day's collections
D) An invoice

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

An account from a painter for work completed on the office was received. The payment is due 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 14

What source document supports the provision of services on credit?

A) Supplier's invoice received by the business
B) A copy of a credit note issued by the vendor
C) Cash receipt
D) Invoice sent by the business to a customer

Question 15

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 16

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 17

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

A) Dr Cash
Cr Accounts payable
B) Dr Purchases
Cr Accounts payable
C) Dr Inventory
Cr Accounts payable
D) No accounting entry is required yet.

Question 18

ABC paid $1 million for a business and acquired the following assets and liabilities:

Which of these entries would be made for goodwill?

A) Dr Goodwill $50 000
B) Dr Goodwill $950 000
C) Cr Goodwill $200 000
D) Goodwill is not entered in the accounts until the business is sold.

Question 19

Which of the following is NOT a source document?

A) Invoice
B) Cash register listings
C) Goods received advice
D) Journal entry

Question 20

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 21

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 22

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 23

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 is the closing balance of inventory?

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

Question 24

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

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) recording the same transaction more than once.

Question 25

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

A) Insurance expense
B) Prepaid rent
C) Accumulated depreciation
D) Retained profits

Question 26

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?

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 27

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 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 28

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 29

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 is an accrual accounting end-of-period adjustment?

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

Question 30

Which of the following statements about a trial balance is 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 will detect if a transaction was not recorded.
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 statements are true.

Question 31

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?

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

Question 32

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 the acquisition of a noncurrent asset?

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

Question 33

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 34

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 35

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 is the closing balance of the bank account?

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

Question 36

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?

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

Question 37

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?

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 38

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 39

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, that is, debiting the account that should have been credited and crediting the account that should have been debited.

Question 40

The following accounts were taken from the trial balance:

Net profit for the period is:

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

Question 41

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

A) Sales revenue account is debited.
B) Depreciation account is credited.
C) Share capital is debited.
D) A net loss is debited to the retained profits account.

Question 42

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 43

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 credited.
D) Dividends received are credited.

Question 44

Which of the following accounts is not closed off at year-end?

A) Cost of goods sold
B) Amortisation expense
C) Interest revenue
D) Accounts receivable

Question 45

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

A) Accounts receivable
B) Profit and loss summary
C) Dividend declared
D) Sales revenue