Deck 3: Recording Transactions

Question 1

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

A)Creditor
B)Debtor
C)Debit
D)Credit

Answer 1

A

Question 2

If a transaction causes an equity account to decrease,which of these related effects may also occur?

A)A decrease of an equal amount in a liability account
B)An increase of an equal amount in an asset account
C)A decrease of an equal amount in an asset account
D)A decrease of an equal amount in another equity account

Answer 2

C

Question 3

A chart of accounts is:

A)A planning device used by management to anticipate information flows through the accounting system
B)A list of accounts receivable
C)A chart showing the organisational structure of the firm
D)A plan of the ledger listing account titles and their related numbers

Answer 3

D

Question 4

The double-entry system requires how many of the following to be true?
I)At least one account should be debited and one account credited
Ii)Total debits should equal total credits
Iii)The accounting equation should stay in balance

A)0
B)1
C)2
D)3

Question 5

Select the account types for these items:
$\bullet$ Prepaid insurance
$\bullet$ Mortgage
$\bullet$ GST Collected
$\bullet$ Light and power

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

Question 6

The source document for a cash sale could be a:

A)Purchase order
B)Credit card slip
C)Cheque butt
D)Credit note

Question 7

Which of these events would not be recorded by accountants?

A)Received an order from a customer
B)The owner paid his daughter's school fees from the business bank account
C)Credit sale
D)Depreciation on motor vehicles calculated at the end of the firm's financial year.

Question 8

A deposit received in advance by Maharaj Co for services not yet supplied can be initially recorded by Maharaj in a liability account called:

A)Sales
B)Mortgage
C)Unearned income
D)Expenses payable

Question 9

In order to provide timely information for decision-making the life of the business is divided into arbitrary time periods of equal length called:

A)Life cycles
B)Operating cycles
C)Months
D)Accounting periods

Question 10

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

A)Ledger
B)Journal
C)Balance sheet
D)Trial balance

Question 11

Which is the correct statement concerning a chart of accounts?

A)The accounts are listed in alphabetical order
B)Is drawn up at the commencement of a business
C)Is similar for most businesses
D)It is a list of accounts with their current balances

Question 12

A credit entry is made to:

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

Question 13

The accounting entry to record the payment of a liability is

A)Debit an asset account and credit a liability account
B)Debit a liability account and credit an equity account
C)Debit an equity account and credit a liability account
D)Debit a liability account and credit an asset account

Question 14

The term used in the Framework for the Preparation and Presentation of Financial Statements for income which arises in the course of the ordinary activities of an entity is:

A)Revenue
B)Gain
C)Fees
D)Profit

Question 15

The true statement concerning the accounting period is:

A)The length of the accounting period varies with the needs of users.
B)The accounting period originates from the accounting equation
C)Accounting periods are hardly ever shorter than 6 months
D)The accounting period is the sequence of events from transactions through to financial statements

Question 16

The event that may be recorded in a firm's sustainability report but not in their financial report is:

A)Loan repayments
B)Payments made to employees under the Superannuation Guarantee Legislation
C)Planned expenditure on waste disposal
D)Depreciation charged on Environmental Officers motor vehicle

Question 17

The true statement is:

A)GST collections is an asset account
B)In the income statement income and expenses are recorded net of GST
C)If the GST inclusive price of a package of books is $1200 the GST component is $120.
D)The entries to account for GST are regarded as internal transactions

Question 18

Select the account types for these items:
$\bullet$ Repairs and maintenance
$\bullet$ Repairs and maintenance payable
$\bullet$ Accounts receivable
$\bullet$ Drawings

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

Question 19

The transactions below are from the records of Templestowe Picture Framers,the internal transaction is:

A)Cash sale
B)Paid monthly rent on premises
C)Credit sale
D)Recorded depreciation on shop fixtures and fittings

Question 20

GST paid by a business on the purchase of its goods and services,and for which a reduction of GST collected will be claimed from the tax department,is stored in an account called:

A)GST outlays
B)GST collections
C)Creditable acquisitions
D)Input credits

Question 21

The statement relating to a trial balance that is incorrect is:

A)A trial balance may be prepared at any time to test the equality of debits and credits in the ledger
B)A trial balance reports the financial performance of a business
C)The fact that the sum of the debit column equals the sum of the credit column does not guarantee that no errors have been made in the ledger
D)A trial balance is a list of all the accounts in the ledger with their current balances

Question 22

Quinn paid $440,including GST,for advertising.The entry to record this transaction is:

Question 23

The source document associated with the provision of goods on credit is an i______________.

Question 24

The correct classification for these ledger accounts is:

Question 25

T____________________ are events that are given accounting recognition and are the first stage in the accounting cycle.

Question 26

If a sole proprietor who owns an electrical store takes home a DVD player for his own personal use it would be considered to be:

A)An expense because an asset has been given away
B)An increase in equity and a decrease in assets because the proprietor now owns the DVD player
C)A decrease in assets and a decrease in equity because by taking the DVD player the owner has made a drawing from the business
D)An increase in assets and an increase in equity

Question 27

On 20 June Yin repaired Yan's computer and charged her $660 cash including GST.The general journal entry to record the transaction is:

Question 28

Which statement relating to the general journal is incorrect?

A)The debit and credit effects of each transaction are shown together
B)It is referred to as a book of original entry
C)It provides a record of transactions in date order
D)It can use the running balance format or the 'T' format

Question 29

On 15 May Osaka paid $715 cash for an 18-month insurance policy including 10% GST.The general journal entry to record the payment is:

Question 30

Which of these errors would be detected by a trial balance?

A)A cash sale was recorded in the sales account as $237 instead of $273 but was correctly recorded in the bank account
B)Office salaries were recorded as office expenses
C)The sales assistant pocketed the cash from a cash sale and did not ring it up on the register
D)Purchase of inventory on credit was recorded as a debit to the plant and equipment account and a credit to creditors

Question 31

A __________ of _______________ is a plan of the ledger listing the names of all ledger accounts together with an appropriate numbering system.

Question 32

Creol Soaps requires its customers to pay for their orders six weeks before shipping the goods.How should the payments be initially recorded by Creol?

A)Debit bank,credit a liability account
B)Debit bank,credit an expense account
C)Debit bank,credit an asset account
D)Debit bank,credit an income account

Question 33

The accounting entry when income is earned on credit is:

A)Debit cash,credit income
B)Debit accounts receivable,credit income
C)Debit income,credit accounts payable
D)Debit income,credit accounts receivable

Question 34

J.Wood performed carpentry services for $7500.He received cash of $2000 and gave

Question 35

The liability account recording GST collected by an entity from its customers is titled GST ______________.

Question 36

A firm borrows $4000 cash from the bank.The transaction is recorded as:

A)Debit Bank Loan $4000; credit Owner's capital $4000
B)Debit Cash at bank $4000; credit Accounts Receivable $4000
C)Debit Cash at bank $4000; credit Bank Loan $4000
D)Debit Bank Loan $4000; credit Cash at bank $4000

Question 37

A trial balance will disclose which of these errors?

A)Recording a transaction twice
B)Recording an amount on the right side of the wrong account
C)Recording a debit as a credit
D)Omitting a transaction

Question 38

The bookkeeper 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)Overstated profit for the period
B)Understated equity at the end of the period
C)Understated assets at the end of the period
D)No effect on profit of the period

Question 39

Machinery is purchased on credit for $16 000 plus GST.The general journal entry to record this transaction is:

Question 40

The ______________ ___________ assumption involves the division of the operating life of a firm into equal time intervals.

Question 41

A ____________ __________________ is a list of ledger accounts and their balances prepared to verify the equality of debits and credits in the ledger.

Question 42

The accounting system where recording is a dual process and every transaction has two or more effects on the accounting equation is known as the _______________-_____________ accounting system.

Question 43

In the accounting equation income and expenses can be thought of as sub-classifications of e__________.

Question 44

P___________________ is the process of transferring entries in the journal to the appropriate ledger accounts.

Question 45

Accounts in the general _____________ are organised in the order that they appear in the accounting reports.