Deck 4: Recording Transactionsthe Journal and Ledger Accounts

Question 1

After closing off the accounts, which of the following accounts will have a zero balance?

A)Cash
B)Creditors
C)Vehicle Expense
D)Inventory

Answer 1

C

Question 2

Which of the accounts listed below would be increased with a debit entry?

A)Loans
B)Equity
C)Vehicle
D)Sales

Answer 2

C

Question 3

When the owner of a business withdraws money from the business for her own use:

A)the cash account is debited.
B)the cash account is credited.
C)the drawings account is credited.
D)the equity account is credited.

Answer 3

B

Question 4

A company had the following transactions:
Journalise these transactions.

Question 5

Your ledger accounts have the following balances: $\begin{array}{|l|r|}\hline \text { Cash } & 15,000 \\\hline \text { Debtors } & 125,000 \\\hline \text { Creditors } & 92,000 \\\hline \text { Capital } & ? ? ? \\\hline \text { Equipment } & 175,000 \\\hline \text { Sales } & 289,000 \\\hline \text { Inventory } & 42,000 \\\hline \text { Drawings } & 22,000 \\\hline \text { Expenses } & 48,000 \\\hline \text { Cost of Sales } & 140,000 \\\hline\end{array}$ What is the balance of the Capital account?

A)$ 275 000
B)$ 138 000
C)$186 000
D)$243 000

Question 6

With a computerised accounting system, there is no need for an audit trail.

Question 7

A balanced trial balance is proof that there are no errors in the accounts.

Question 8

The Cash account has a beginning balance of $500. There are three additional debits totalling $1 250. In addition, there are four credits totalling $775. What is the balance in the account?

A)$ 1 750
B)$ 2 525
C)$ 1 275
D)$ 975

Question 9

Which of the accounts listed below would be decreased with a debit entry?

A)Drawings
B)Cash
C)Vehicle
D)Sales

Question 10

A sale on account results in a debit to cash and a credit to sales.

Question 11

What are two advantages and two disadvantages of the double-entry accounting system?
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Question 12

List five examples of errors that would prevent a trial balance from balancing.
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Question 13

A book of original entry, used to record all relevant details needed to record a transaction in the ledger is the:

A)balance sheet.
B)journal.
C)profit and loss book.
D)worksheet.

Question 14

A listing of all open accounts with their debit or credit balances totalled is a:

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

Question 15

The process of transferring revenue and expense accounts to the profit and loss account, and then transferring the balance of the profit and loss account and drawing account to the capital account is:

A)creating the trial balance.
B)creating the profit and loss statement.
C)balancing the accounts.
D)closing off the accounts.

Question 16

In double-entry accounting, transactions are journalised and then posted to ledger accounts. What is the difference in these two processes and why is it necessary to do both?
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Question 17

The book that is used to record transactions in a double-entry accounting system is the:

A)journal.
B)ledger.
C)profit and loss book.
D)subsidiary book.

Question 18

Recording a payment for utilities as a debit to vehicle expense would not cause the trial balance to be out of balance.

Question 19

Which of the following is correct for recording the payment to a supplier for a purchase previously made on account?

A)Debit Cash, Credit Payables/Creditors
B)Debit Inventory, Credit Cash
C)Debit Payables/Creditors, Credit Cash
D)Debit Cash, Credit Inventory

Question 20

Your ledger accounts have the following balances: $\begin{array}{|l|r|}\hline \text { Cash } & 10,000 \\\hline \text { Creditors } & 85,000 \\\hline \text { Capital } & 337,000 \\\hline \text { Equipment } & 250,000 \\\hline \text { Sales } & 325,000 \\\hline \text { Inventory } & 50,000 \\\hline \text { Cost of Sales } & 250,000 \\\hline \text { Drawings } & 25,000 \\\hline \text { Expenses } & 52,000 \\\hline \text { Debtors } & 110,000 \\\hline\end{array}$ What is the balance of the debit and credit columns of the trial balance?

A)$747 000
B)$525 000
C)$994 000
D)$785 000

Question 21

After adjustments are completed, the next step is to prepare:

A)the balance sheet.
B)the profit and loss statement.
C)the trial balance.
D)the adjusted trial balance.

Question 22

After closing off the accounts, which of the following accounts will not appear on the balance sheet?

A)Cash
B)Profit and loss
C)Capital
D)Equipment

Question 23

Which of the following is a contra account?

A)Depreciation expense
B)Bad debt expense
C)Cost of sales
D)Accumulated depreciation

Question 24

An account used to calculate gross profit on trading, prior to the profit and loss account is a/an ________ account.

A)cost of sales
B)inventory
C)contra
D)trading

Question 25

The report prepared from the trading and manufacturing accounts is required by the government.

Question 26

A company determines that depreciation expense for the year is $25 000, 10% of the cost of their non-current assets. The journal entry to record this adjustment would include:

A)a debit to accumulated depreciation expense for $25 000.
B)a credit to accumulated depreciation for $25 000.
C)a debit to depreciation expense for $2 500.
D)a credit to depreciation expense for $2 500.

Question 27

Doubtful debts provision is a contra asset account.

Question 28

In a/an ________, an expense needs to be increased and a liability account set up.

A)accrual
B)prepayment
C)depreciation
D)bad debt adjustment

Question 29

Deferred revenue account is a/an ________ account.

A)asset
B)liability
C)equity
D)sales

Question 30

If, at the end of the accounting period, non-current assets total $800 000 and depreciation is calculated based on 8% per annum straight line, depreciation expense would total:

A)$64 000
B)$46 000
C)$800 000
D)$10 000

Question 31

Which of the following would not be found in a manufacturing account?

A)Indirect labour
B)Direct materials
C)Administrative salaries
D)Depreciation on plant equipment

Question 32

Explain the purpose of the closing off process and identify which accounts will remain after the process is completed.
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Question 33

In adjusting for a prepayment, the expense account needs to be ________ and an asset account needs to be ________.

A)set up; credited
B)set up; reduced
C)credited; debited
D)debited; credited

Question 34

End of period adjustments are most often the result of:

A)errors in recording previous transactions.
B)closing off the accounts.
C)errors found in the trial balance.
D)timing differences.

Question 35

On a worksheet, the Accumulated Depreciation account has a balance of $50 000 on the trial balance. An adjustment is made to increase Depreciation Expense by $5 000. The balance of Accumulated Depreciation in the adjusted trial balance is:

A)a credit balance of $55 000.
B)a debit balance of $45 000.
C)a credit balance of $45 000.
D)a debit balance of $55 000.

Question 36

A professional sports team sells season tickets prior to the beginning of the season. In the current year, the team sold $500 000 of tickets. At the end of the fiscal year, six of the ten games covered in the season ticket subscription had been played. The amount needed to be adjusted to deferred revenue is:

A)$500 000
B)$200 000
C)$300 000
D)$0

Question 37

In closing off the accounts the balance in the Cost of Sales account will be:

A)debited to the profit and loss account.
B)debited to the capital account.
C)transferred to the balance sheet.
D)credited to the drawings account.

Question 38

In closing off the accounts, profit is transferred to capital.

Question 39

In a perpetual inventory system, an end of period inventory count and valuation is required to compute cost of sales.

Question 40

On a worksheet, the balance of the Doubtful Debts Provision account will appear:

A)in the debit column of the profit and loss columns.
B)in the credit column of the profit and loss columns.
C)in the debit column of the balance sheet columns.
D)in the credit column of the balance sheet columns.

Question 41

On the worksheet, a loss would appear as a credit in the profit and loss columns.

Question 42

Which of the following is the proper order of accounts in the chart of accounts?

A)Assets, equity, liabilities, revenues
B)Equity, assets, revenues, liabilities
C)Liabilities, equity, revenues, assets
D)Assets, liabilities, equity, revenues

Question 43

The adjusted trial balance is prepared following preparation of the financial statements.

Question 44

In the trial balance of a firm's accounting records, Inventory has a balance of $40 000 and Purchases has a balance of $1 000 000. The count of ending inventory is $50 000. Cost of sales is:

A)$1 040 000
B)$1 050 000
C)$ 990 000
D)$ 910 000