Deck 3: Beginning the Accounting Cycle

Question 1

The process of initially recording business transactions in a journal is:

A)sliding.
B)posting.
C)journalizing.
D)transposing.

Answer 1

C

Question 2

The entry to record the payment of office salaries would be:

A)Debit Cash; Credit Accounts Receivable
B)Debit Cash; Credit Salaries Expense
C)Debit Salaries Expense; Credit Accounts Payable
D)Debit Salaries Expense; Credit Cash

Answer 2

D

Question 3

If you debit Prepaid Insurance, you most likely will:

A)credit Fees Earned.
B)debit Cash.
C)credit Insurance Expense.
D)credit Cash.

Answer 3

D

Question 4

The general ledger:

A)is the book of original entry.
B)is the book of final entry.
C)lists the transactions in chronological order.
D)is before the general journal.

Question 5

"PR" in the general journal and general ledger stands for:

A)per reviewer.
B)posting reference.
C)prior receipt.
D)None of the above are correct.

Question 6

Business transactions are first recorded in the:

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

Question 7

How are credits distinguished from debits in the journal?

A)A line separation
B)A different color
C)Indenting
D)There is no distinction.

Question 8

The general journal:

A)is the book of original entry.
B)is the book of final entry.
C)contains account balances.
D)is completed after the general ledger.

Question 9

When recording a transaction in a journal, the account listed first is always the:

A)debit.
B)credit.
C)increase.
D)decrease.

Question 10

The twelve-month period a business chooses for its accounting period is a(n):

A)calendar year.
B)accounting period.
C)fiscal year.
D)accounting cycle.

Question 11

The time period for which a statement of owner's equity is prepared is a(n):

A)calendar year.
B)accounting period.
C)fiscal period.
D)accounting cycle.

Question 12

A journal entry affecting three or more accounts is called a:

A)multi-level entry.
B)multi-step entry.
C)compound entry.
D)simple entry.

Question 13

The journal entry debiting Cash and crediting Capital would be a result of a(n):

A)withdrawal.
B)expense.
C)investment.
D)revenue.

Question 14

Which of the following entries records the owner taking cash for personal use?

A)Wage Expense, debit; Cash, credit
B)Capital, debit; Cash, credit
C)No entry is necessary since the owner owns the cash and the entire business.
D)Withdrawals, debit; Cash, credit

Question 15

How are explanations distinguished in the journal?

A)They are underlined.
B)They are in bold print.
C)They are indented below the credit entries.
D)They are written at the margin, in line with the debit entries.

Question 16

Financial statements that are prepared for a period shorter than a year are called:

A)accounting period statements.
B)fiscal year statements.
C)interim statements.
D)journal statements.

Question 17

The process that begins with recording business transactions and includes the completion of the financial statements is the:

A)calendar year.
B)natural business years.
C)fiscal year.
D)accounting cycle.

Question 18

The first step of the accounting cycle is:

A)recording journal entries.
B)posting to the ledger.
C)preparing a trial balance.
D)analyzing business transactions.

Question 19

Which of the following entries would record the payment of a utility bill?

A)Utilities Expense, debit; Cash, credit
B)Cash, debit; Utilities Expense, credit
C)Utilities Expense, debit; Accounts Payable, credit
D)Accounts Receivable, debit; Utilities Expense, credit

Question 20

Revenue is traditionally recognized in the accounting records when:

A)cash is received.
B)services are rendered.
C)it is incurred.
D)None of the answers are correct.

Question 21

Interim statements are prepared to:

A)notify management of the company's current financial position.
B)notify investors of the company's current financial position.
C)allow management to make changes to the business before processing year-end financial statements.
D)All of the above are correct.

Question 22

The entry to record completing a financial lecture and immediately collecting payment from customers would be:

A)
B)
C)
D)

Question 23

Antonio's catered a reception. The total price was $500. The customer paid half of the fee in cash and placed the remainder on account. The journal entry to record this transaction is:

A)
B)
C)
D)

Question 24

Which of the following accounts would be debited in a proper journal entry?

A)Accounts Payable when it is increased
B)Accounts Receivable when it is increased
C)Cash when it is decreased
D)Capital when it is increased

Question 25

A calendar year is:

A)any 12-month period that a business chooses for its accounting year.
B)the 12-month period beginning with January.
C)the period for when a interim financial statement would be completed.
D)All of these answers are correct.

Question 26

The general journal does not have a column titled:

A)Date.
B)Account Titles & Descriptions.
C)Dr. and Cr.
D)Balance.

Question 27

The journal entry to record an investment by the owner would most commonly include:

A)a debit to Cash and a credit to Fees Earned.
B)a debit to Capital and a credit to Cash.
C)a debit to Fees Earned and a credit to Capital.
D)a debit to Cash and a credit to Capital.

Question 28

Riley's Book Review billed customers $450. The journal entry to record this transaction is:

A)Accounts Receivable debit $450; Editing Fees credit $450
B)Editing Fees debit $450; Riley, Capital credit $450
C)Accounts Payable debit $450; Editing Fees credit $450
D)Accounts Payable debit $450; Riley, Capital credit $450

Question 29

Renzi's Volleyball Gym purchased equipment for $1,200. It made a down payment of $600 with the remainder on account. The journal entry to record this transaction is:

A)
B)
C)
D)

Question 30

The trial balance lists the accounts:

A)alphabetically.
B)in the same order as in the ledger.
C)all debits first and then credits.
D)all credits first and then debits.

Question 31

During the month of January, Katelyn invested $11,000 in starting her legal practice. The proper journal entry would be:

A)Cash, debit $11,000; Katelyn's Capital, credit $11,000
B)Accounts Payable, debit $11,000; Cash, credit $11,000
C)Cash, debit $11,000; Revenue, credit $11,000
D)Katelyn's Capital, debit $11,000; Cash, credit $11,000

Question 32

A transaction completed by Norton Company caused a $4,000 increase in both the total assets and the total liabilities. This transaction could have been:

A)purchase of office equipment for $12,000, paying $8,000 cash, with the rest on account.
B)investment by the owner of an additional $4,000.
C)purchase of office equipment, paying $4,000 cash, and $8,000 on account.
D)None of these answers are correct.

Question 33

Which of the following entries records the acquisition of office supplies for cash?

A)
B)
C)
D)

Question 34

As Withdrawals increase:

A)owner's equity decreases.
B)owner's equity increases.
C)Cash increases.
D)expense increases.

Question 35

BNL completed a performance and collected revenue of $8,000 not previously billed or recorded. The journal entry to record the collection would be:

A)
B)
C)
D)

Question 36

On July 1, Hill's Construction paid six months' insurance in advance. The journal entry to record this transaction is:

A)Debit Prepaid Insurance; Credit Cash
B)Debit Insurance Expense; Credit Cash
C)Debit Cash; Credit Prepaid Insurance
D)Debit Cash; Credit Insurance Expense

Question 37

If Accounts Payable has been debited, it is most likely that:

A)the company made a payment to a creditor.
B)a customer made a payment.
C)the company made a purchase on account.
D)None of these are possible.

Question 38

During the month of October, Ford advertised on the Internet. Ford received the bill for $600 in October, but waited until November to pay the advertising expense. The journal entry to record the payment in November is:

A)Accounts Payable debit; Cash credit
B)Advertising Expense debit; Accounts Payable credit
C)Advertising Expense debit; Cash credit
D)The journal entry is not made in November.

Question 39

Conner Sales' total assets and total liabilities increased $400. The transaction could have been:

A)purchase of supplies for cash, $400.
B)purchase of supplies for $600 with a down payment of $200 and the remainder on account.
C)paid the rent for the month, $700.
D)None of these answers are correct.

Question 40

If Accounts Payable has been credited, it is most likely that:

A)a collection from a customer was made.
B)a service was provided to a cash customer.
C)the company made a purchase on account.
D)None of these are possible.

Question 41

If Capital has been credited, it is likely that:

A)services were provided to a cash customer.
B)services were provided to a charge customer.
C)the owner made an investment.
D)All of these are possible

Question 42

If Accounts Payable has been debited, it is most likely that:

A)a payment was made on account.
B)a purchase was made on account.
C)a charge customer made a payment.
D)None of these are possible.

Question 43

A fiscal year is always January 1 through December 31.

Question 44

Which of the following statements is false regarding a proper journal entry?

A)Debits are always listed first in the entry.
B)Credits are always indented.
C)Skip a line between transactions.
D)Always list the assets first.

Question 45

The journal entry to record an exchange of assets would include:

A)a debit to Cash and a credit to Fees Earned.
B)a debit to Supplies and a credit to Accounts Payable.
C)a debit to Cash and a credit to Accounts Receivable.
D)a debit to Fees Earned and a credit to Accounts Receivable.

Question 46

A journal is called the book of final entry.

Question 47

Insurance paid in advance is a liability.

Question 48

The general journal entry to record the earning of revenue would most commonly include:

A)a debit to Accounts Receivable and a credit to Capital.
B)a debit to Cash and a credit to Capital.
C)a debit to Fees Earned and a credit to Cash.
D)a debit to Accounts Receivable and a credit to Fees Earned.

Question 49

If Prepaid Rent has been debited, it is likely that:

A)the rent was paid for three months in advance.
B)a bill for the past month's rent was received.
C)this month's rent was paid.
D)All of these are possible.

Question 50

The time period for which an income statement is prepared is called the accounting period.

Question 51

To find an explanation for a transaction, look in the:

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

Question 52

If Fees Earned has been credited, it is most likely that:

A)services were provided.
B)the owner made an investment.
C)a correcting entry for the overstatement of revenue was recorded.
D)All of these are possible.

Question 53

The journal entry to record a withdrawal by the owner would most commonly include:

A)a debit to Wage Expense and a credit to Cash.
B)a debit to Capital and a credit to Cash.
C)a debit to Withdrawals and a credit to Cash.
D)a debit to Cash and a credit to Wage Expense.

Question 54

If Cash has been debited, it is likely that:

A)the owner made an investment.
B)a charge customer made a payment.
C)the business borrowed cash from the bank.
D)All of these are possible.

Question 55

The general journal entry to record a payment to a creditor would most commonly include:

A)a debit to Accounts Payable and a credit to Cash.
B)a debit to Capital and a credit to Cash.
C)a debit to Supplies and a credit to Cash.
D)a debit to Cash and a credit to Accounts Payable.

Question 56

Interim statements are statements that are usually prepared for a portion of the business' fiscal year.

Question 57

Transactions are listed in chronological order in the journal.

Question 58

If Accounts Payable has been credited, it is most likely that:

A)a payment was made on account.
B)a purchase was made on account.
C)a correcting entry was made for the overstatement of the purchase of equipment on account.
D)None of these are possible.

Question 59

If Rent Expense has been debited, it is likely that:

A)the rent was paid for three months in advance.
B)a copy of the lease was received.
C)this month's rent was paid.
D)All of these are possible.

Question 60

The general journal entry to record the purchase of an asset on account would include:

A)a debit to Accounts Receivable and a credit to Fees Earned.
B)a debit to Equipment and a credit to Accounts Payable.
C)a debit to Accounts Payable and a credit to Equipment.
D)a debit to Supplies and a credit to Cash.

Question 61

A company would review the ledger if an account balance was needed.

Question 62

Complete the following questions based on the journal entry below:

Question 63

Define and discuss a calendar year, accounting period, and fiscal year.

Question 64

What are interim financial statements?

Question 65

Provide an explanation for the following journal entries:
a)Prepaid Rent debited, Cash credited
b)Office supplies debited, Accounts Payable credited
c)Cash debited, Capital credited
d)Withdrawals debited, Cash credited
e)Accounts Payable debited, Cash credited

Question 66

The debit part of the transaction is recorded first in the journal entry.

Question 67

A compound journal entry affects more than two accounts in the transaction.

Question 68

Record the following selected transactions for January in a two-column journal, identifying each entry by letter:
(a)Earned $7,000 fees; customer will pay later.
(b)Purchased equipment for $45,000, paying $20,000 in cash and the remainder on credit
(c)Paid $3,000 for rent for January.
(d)Purchased $2,500 of supplies on account.
(e)A. Allen $1,000 investment in the company.
(f)Received $7,000 in cash for fees earned previously.
(g)Paid $1,200 to creditors on account.
(h)Paid wages of $6,250.
(i)Received $7,150 from customers on account.
(j)A. Allen withdrawal of $1,750.

Question 69

Post the following transaction to the ledger of Wiley Services. The partial chart of accounts for Thompson's Company is:
111 Cash
121 Accounts Receivable
211 Accounts Payable
411 Service Fees

Question 70

The posting reference column in the ledger is:

A)used to record the journal and page number the transactions originated.
B)used to record the ledger number.
C)used to record the date.
D)not used.

Question 71

Posting is performed by transferring information from the journal to the:

A)ledger.
B)trial balance.
C)balance sheet.
D)income statement.

Question 72

The debit is indented in a journal entry.

Question 73

Prepare in proper form journal entries for the following transactions. Omit explanations.
October

Question 74

Journalize, in proper form, the following transactions that occurred during September. Omit explanations.
September

Question 75

A business's fiscal year that ends at the same time as a slow seasonal period begins is the natural business year.

Question 76

The purpose of posting is to:

A)list the transactions in chronological order in the journal.
B)provide an explanation of the transaction.
C)update the account balances in the ledger.
D)correct a previous entry.

Question 77

Complete the following entries by using a "debit" or "credit."

Question 78

Describe the difference in information contained in the general journal vs. the general ledger.

Question 79

Cooper Company began business in June. Prepare the following transactions for June. Omit explanations.
June

Question 80

A credit to a liability account was posted to an owner's equity account. This would cause:

A)assets to be overstated.
B)liabilities to be understated.
C)owner's equity to be understated.
D)net income to be overstated.