Deck 4: Journalizing and Posting Transactions

Question 1

The flow of data through the accounting information system includes analyzing transactions,journalizing,posting,and preparing a trial balance.

Answer 1

True

Question 2

Entering transactions in a journal is called posting.

Answer 2

False

Question 3

An account in the chart of accounts is assigned a number at random.

Answer 3

False

Question 4

A separate line in the two-column journal should be used for each account title.

Question 5

Information about cash disbursements can be obtained from check stubs and carbon copies of checks.

Question 6

The Description column of a two-column journal is used to enter the titles of the accounts affected by each
transaction,together with a description of the transaction.

Question 7

A complete set of all the accounts used by a business is known as the general ledger.

Question 8

When the trial balance indicates that the ledger is in balance,you can assume there are no errors in the ledger.

Question 9

The ledger is a reliable source of information only when all of the transactions entered in the journal have been
posted.

Question 10

The posting reference,amount,and description are the three items of information about each transaction that should e entered in the ledger accounts.

Question 11

Source documents begin the process of entering transactions in the accounting system.

Question 12

To make the posting process easier,posting reference entries are made at the same time that transactions are
entered in the two-column journal.

Question 13

The journal provides the information needed to transfer the debits and credits to the accounts in the ledger.

Question 14

It is permissible to enter information about a transaction in the ledger accounts first,before entering the information
in the journal.

Question 15

Source documents provide objective,verifiable evidence of business transactions.

Question 16

Copies of sales tickets or sales invoices issued to customers or clients provide information about sales of goods or
services.

Question 17

The purpose of a journal is to provide a chronological record of all transactions completed by the business.

Question 18

The purpose of a trial balance is to prove that the totals of the debit and credit balances in the ledger accounts
are equal.

Question 19

The main advantage of a two-column account is that it maintains a running balance.

Question 20

The chart of accounts includes the account titles in numerical order.

Question 21

Entering the account number in the Posting Reference column of the journal is the first step in the posting process.

Question 22

Each entry in the journal affects two or more accounts.

Question 23

A two-column journal has only two amount columns-one for the amount of the entry and one for the running balance.

Question 24

An erasure may suggest that you are hiding something.

Question 25

A trial balance can only be accurately prepared on the last day of the accounting period after all transactions have been entered.

Question 26

The process of copying the debits and credits from the journal to the ledger accounts is known as posting.

Question 27

The flow of financial data through the accounting information system does NOT include

A) analyzing transactions.
B) journalizing and posting transactions.
C) preparing a trial balance.
D) receiving payment for all accounts receivable.

Question 28

After posting journal information to the ledger accounts,a check mark should be entered in the Posting Reference column of the journal to indicate that the transaction item has been posted.

Question 29

The chart of accounts includes assets,liabilities,and owner's equity accounts only.

Question 30

Transactions which do not affect the cash account do not need to be entered in the journal,since they do not affect net income or loss.

Question 31

The general ledger is kept to supply management with desired information in summary form.

Question 32

No entries are made in the Posting Reference column in a two-column journal when journalizing.

Question 33

When entering titles of accounts in the two-column journal,the account to be credited is entered first and the account to be debited is entered second.

Question 34

Firms are more likely to use a four-column journal account than T accounts.

Question 35

In some cases,erasures are better for corrections than the ruling method.

Question 36

Source documents provide the input for the accounting process.

Question 37

Purchase invoices received from suppliers provide information about cash payments.

Question 38

Almost any document that provides information about a business transaction is included in the chart of accounts.

Question 39

All transactions must be posted before preparing a trial balance.

Question 40

A list of all the accounts used by a business is called a trial balance.

Question 41

Receipt stubs,carbon copies of receipts,cash register tapes,or memos of cash register totals provide information about

A) cash payments.
B) cash receipts.
C) accounts payable.
D) purchases of goods or services.

Question 42

Every entry in the journal should include all of the following EXCEPT

A) the title of each account affected.
B) the amounts.
C) a brief description.
D) the balance of the accounts affected.

Question 43

For EVERY transaction,the accountant enters the

A) year,month,and day.
B) month and day.
C) day.
D) year and day.

Question 44

The transaction to record payment for delivery equipment that was purchased on account in the previous month would include

A) debiting Cash and crediting Accounts Receivable.
B) debiting Cash and crediting Accounts Payable.
C) debiting Accounts Payable and crediting Cash.
D) debiting Delivery Equipment and crediting Cash.

Question 45

The month in the journal is recorded

A) with every transaction.
B) as the first entry on a page.
C) for the first and last transaction of the month.
D) for the last transaction of the month.

Question 46

The simplest form of journal is one with

A) four columns.
B) three columns.
C) two columns.
D) one column.

Question 47

A chart of accounts does NOT include

A) assets.
B) liabilities.
C) owner's equity.
D) names of suppliers.

Question 48

Sales revenue received in cash is entered by

A) debiting Cash and crediting Sales Revenue.
B) debiting Sales Revenue and crediting Cash.
C) debiting Cash and crediting Accounts Payable.
D) debiting Accounts Payable and crediting Cash.

Question 49

The steps in the journalizing process include all of the following EXCEPT

A) enter the balance.
B) enter the debit.
C) enter the date.
D) enter the credit.

Question 50

Journalizing does NOT include

A) debiting account(s)that are affected.
B) crediting account(s)that are affected.
C) posting the debits and credits to the accounts.
D) entering the date.

Question 51

Purchase invoices received from suppliers provide information about

A) cash receipts.
B) sales of goods.
C) purchases of goods or services.
D) cash payments.

Question 52

A chronological record of financial transactions expressed as debits and credits to accounts is provided by the

A) ledger.
B) journal.
C) balance sheet.
D) trial balance.

Question 53

Because the first formal accounting record of a transaction is made in a journal from source document information, a journal is commonly referred to as a(n)

A) ledger.
B) account.
C) cross-reference.
D) book of original entry.

Question 54

If the owner of a company invested cash in a business enterprise,the transaction would include

A) debiting Cash and crediting Capital.
B) debiting Capital and crediting Cash.
C) debiting Cash and crediting Revenue.
D) debiting Revenue and crediting Cash.

Question 55

When delivery equipment is purchased on account,the transaction to be entered by the purchaser includes

A) debiting Delivery Equipment and crediting Accounts Payable.
B) debiting Delivery Expense and crediting Cash.
C) debiting Delivery Expense and crediting Accounts Payable.
D) debiting Delivery Equipment and crediting Cash.

Question 56

Purchase invoices received from suppliers provide information about

A) cash payments.
B) cash receipts.
C) sales of goods or services.
D) purchases of goods or services.

Question 57

The accounts in the chart of accounts are arranged in

A) alphabetical order.
B) numerical order.
C) chronological order.
D) the order they are created.

Question 58

Copies of sales tickets or sales invoices issued to customers or clients provide information about

A) sales of goods or services.
B) purchases of goods or services.
C) cash receipts.
D) cash payments.

Question 59

Forms and papers that provide information about a business transaction are called

A) ledgers.
B) accounts.
C) source documents.
D) journals.

Question 60

The Posting Reference column of the journal provides a cross-reference between the

A) ledger and accounts.
B) journal and ledger.
C) ledger and financial statements.
D) journal and financial statements.

Question 61

Instead of T accounts,businesses are more likely to use a

A) chart of accounts.
B) balance sheet.
C) four-column account.
D) special journal.

Question 62

Cash is used to pay for a car for personal use by the owner.The transaction includes

A) debiting Cash and crediting Drawing.
B) debiting Drawing and crediting Cash.
C) debiting Capital and crediting Cash.
D) debiting Car Expense and crediting Cash.

Question 63

Transactions and journal entries are shown below.Read the transaction and determine if the correct journal entry
has been made.If a correction is necessary,use the ruling method to make the correction.
a Bert Hollis, the owner, invested $\$ 45,000$ in the business.

$\begin{array}{ll}\text { Cash } & 45,000 \\\text { Bert Hollis, Drawing } && 45,000\end{array}$

b. Hollis paid the monthly rent of $\$ 1,275$ .

$\begin{array}{ll}\text { Cash } & 1,275 \\\text { Rent Expense } && 1,275\end{array}$

c. Hollis paid cash to Union Electric for monthly utilities, $\$ 250$ .

$\begin{array}{llr} \text { Utilities Expense } &250 \\ \text {Accounts Payable } &&250\\\end{array}$

d. Hollis made payment on account for office supplies purchased previously, $\$ 100$ .

$\begin{array}{llr} \text { Office Supplies } &100\\ \text { Accounts Payable } &&100\\\end{array}$

e. A customer made a payment on account, $\$ 1,100$ .
$\begin{array}{ll}\text { Accounts Receivable } & 1,100 \\\text { Service Fees } && 1,100 \end{array}$

Question 64

George Smyth opened a computer repair business on Apr.1,20--.During the first month of operations,the firm had
the following transactions.Record these transactions on page 1 of the general journal.Omit explanations.
Post appropriate transactions to the general ledger.
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Apr. 1 George Smyth invested $\$ 30,000$ cash in the business.
2 Paid rent for April, $\$ 2,100$ .
8 Bought equipment for $\$ 12,000$ and issued a check for $\$ 3,000$ as a down payment.
12 Performed services for $\$ 3,200$ in cash, and $\$ 1,200$ on credit.
19 Paid electric bill, $\$ 225$ .
25 Recerved $\$ 900$ on account from credit customers. ?
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$\begin{array}{ll}& \text { GENERAL LEDGER } \\ \text { Account Cash } && \text { Account No. 101 } \\\end{array}$

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Question 65

Transactions and journal entries are shown below.Read the transaction and determine if the correct journal entry
has been made.If a correction is necessary,prepare a correcting entry.
$\begin{array}{llll}a.&\text { Emma Fox, the owner, invested } \$ 47,000 \text { cash. }\\\\&\text { Equipment }& 47,000 \\&\text { Emma Fox, Capital } && 47,000 \\\\b.& \text { Fox paid wages of } \$ 2,600 & \\\\&\text { Wages Expense } & 2,600\\&\text { Wages Payable }& & 2,600 \\\\c. &\text { Fox paid the monthly utility bill, \( \$ 375 \).}\\\\&\text { Supplies}&375\\&\text { Cash}&&375\\\\e. &\text {Services were provided to a client on account, \( \$ 700 \).}\\\\&\text {Accounts Payable}&700\\&\text {Service Fees}&&700\end{array}$

Question 66

To find an error,you should do all of the following EXCEPT

A) double-check every entry.
B) find the difference between debits and credits.
C) erase questionable entries.
D) retrace any math computations.

Question 67

Prepare general journal entries to record the following transactions.Omit explanations.
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Jan. 3 Paid office rent, $\$ 1,600$ .
4 Bought a truck costing $\$ 50,000$ , making a down payment of $\$ 7,000$ .
6 Paid wages, $\$ 3,000$ .
7 Received $\$ 16,000$ cash from customers for services performed.
10 Paid $\$ 4,100$ owed on last month's bills.
12 Billed credit customers, $\$ 5,300$ .
17 Received $\$ 1,800$ from credit customers.
19 Tayl or Gordon, the owner, withdrew $\$ 1,700$ .
23 Paid $\$ 700$ on amount owed for truck.
29 Received bill for utilities expense, $\$ 255$ .

Question 68

Organize a chart of accounts,using correct headings from the list of account titles below:
Accounts Payable
Accounts Receivable
Building
Cash
Equipment
Insurance Expense
Prepaid Insurance
Rent Expense
Service Fees
Dunlop,Capital
Dunlop,Drawing
Supplies
Wage Expense
Wages Payable

Question 69

The payment of a utility bill (like electricity)for the month would include

A) debiting Capital and crediting Accounts Payable.
B) debiting Cash and crediting Utilities Expense.
C) debiting Utilities Expense and crediting Accounts Payable.
D) debiting Utilities Expense and crediting Cash.

Question 70

Corrections in accounts should be made by

A) correction fluid.
B) neat erasure.
C) the ruling method.
D) a permanent marker.

Question 71

The following transactions occurred at Forever Green Lawn Service.Identify which account would be debited and
credited to record each transaction.Write the identifying letters in the proper columns.The first transaction has been
completed as an example.
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A. Cash
B. Accounts Receivable
C. Supplies
D. Equipment
E. Accounts Payable
F. Fees Income
G. Rent Expense
H. Salaries Expense
I. Telephone Expense

Question 72

Corrections in accounts should NOT be

A) traceable.
B) initialed.
C) ruled.
D) covered completely.

Question 73

Prepare general journal entries to record the following transactions.Omit the explanations after each entry.
Mar. 1 J. Lynch invested in a neighborhood movie house. Land, $\$ 100,000$ ; building, $\$ 400,000$ ; and equipment, $\$ 50,000$ ; totaling $\$ 550,000$ .
2 Rental expense for the movies shown for the month, $\$ 6,000$ on account.
5 Ticket sales for the month, $\$ 22,000$ cash.
8 Wages paid for the month, $\$ 11,000$ .
12 Purchased a new popcorn machine, $\$ 3,300$ on account.
17 Paid monthly fee to maintenance company, $\$ 2,700$ .
23 Rented the theater to an organization for a night. Billed them $\$ 2,300$ .
30 Paid $\$ 600$ on the amount owed for the new popcorn machine.

Question 74

Almost any document that provides information about a business transaction can be called a(n)____________________.

Question 75

In the two-column general journal page below,each capital letter represents a part of a journal entry.Write the proper letter next to the item in the list below to identify the proper part of the journal entry.
$\quad\quad\quad\quad\text {GENERAL JOURNAL}\quad\text {Page 1}$
$\begin{array}{|c|c|l|c|c|c|}\hline \begin{array}{c}\mathrm{G} \\\mathrm{H}\end{array} & \mathrm{I} & \mathrm{J} \quad\quad\quad\quad& \mathrm{O} & \mathrm{M} & \\\hline & &\quad\quad \mathrm{K} & \mathrm{P} & & \mathrm{N} \\\hline & &\quad\quad\quad\quad\quad\quad \mathrm{L} & & & \\\hline\end{array}$


-1. Ledger account number of account credited
2. Month
3. Explanation
4. Title of account debited
5. Year
6. Day of the month
7. Title of account credited
8. Amount of debit
9. Amount of credit
10. Ledger account number of account debited

Question 76

If cash is paid for worker salaries,the transaction includes

A) debiting Salaries Expense and crediting Cash.
B) debiting Salaries Expense and crediting Accounts Payable.
C) debiting Salaries Expense and crediting Capital.
D) debiting Cash and crediting Salaries Expense.

Question 77

The Item column in the general ledger is used to describe special entries not including the following entries?

A) Adjusting entries
B) Reversing entries
C) Correcting entries
D) Forwarding entries

Question 78

Prepare a corrected trial balance by changing incorrect amounts and placing each amount in the proper column.
$\begin{array}{c}\text {Wesley's Towing Service}\\\text {Trial Balance}\\\text {September 30, 20--}\\\\\begin{array}{lr}\underline{\text { Account Title }} & \underline{\text { Debit }}&\underline{\text { Credit }}\\\text { Cash } & 13,000 \\\text { Accounts Receivable } & 970 \\\text { Supplies } & 200 \\\text { Prepaid Insurance } & 2,300 \\\text { Equipment } & 10,000\\\text { Accounts Payable } && 5,500 \\ \text { Wesley, Capital } && 20,500 \\\text { Wesley, Drawing } && 320 \\\text { Repair Fees } && 9,000\\\text { Wages Expense } & 6,500 \\\text { Rent Expense } & 1,400 \\\text { Advertising Expense } & 450 \\\text { Utilities Expense } & \underline{500 }&\underline{\quad\quad}\\&35,320&35,320\end{array}\end{array}$
a.
Be sure all accounts have been listed with the appropriate debit or credit balance and check column totals.
b.
The debits to the Cash account are $37,421,and the credits are $34,381.
c.
A $500 payment to a creditor was entered in the journal,but was not posted to the Accounts Payable account.Cash was properly posted.
d.
The Advertising Expense total has a transposition error of $90.
e.
Accounts Receivable contains a slide error.

Question 79

Prepare a corrected trial balance by changing incorrect amounts and placing each amount in the proper column.
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$$\begin{array} { l r r } & \begin{array} { c } \text { Davenport's European Tours } \\\text { Trial Balance } \\\text { October 31, 20-- }\end{array} & \\\text { Account Title } & \text { Dedit } &\text { Credit }\\& 15,560 & \\\text { Cash } & 15,560 \\\text { Accounts Receivable } & 406 \\\text { Supplies } & 246 \\\text { Prepaid Insurance } & 589 \\\text { Equipment } & 24,450\\\text { Accounts Payable } && 6,012 \\\text { Davenport, Capital } && 30,500 \\\text { Davenport, Drawing } && 1,800 \\\text { Repair Fees } && 9,274\\ \text { Wages Expense } & 4,250 \\\text { Rent Expense } & 1,300 \\\text { Advertising Expense } & 290 \\\text { Utilities Expense } & \underline{495}&\underline{\quad\quad} \\&\underline{47,586}&\underline{47,586}\end{array}$$
a.
Be sure all accounts have been listed with the appropriate debit or credit balance and check column totals.
b.
The debits to the Cash account are $36,796,and the credits are $29,009.
c.
A $600 payment to a creditor was entered in the journal,but was not posted to the Accounts Payable account.Cash was properly posted.
d.
The Advertising Expense total has a transposition error of $81.
e.
Accounts Receivable contains a slide error.

Question 80

Posting from the journal to the ledger does NOT involve which of the following steps?

A) Enter the date of each transaction in the accounts.
B) Enter the amount of each transaction in the accounts.
C) Enter the page of the journal from which each transaction is posted in the accounts.
D) Enter the description of the entry.