Deck 3: The General Journal and the General Ledger

Question 1

Process Solutions Company received $193 from a charge customer which was recorded and posted as $391. The journal entry to correct the error is:

A) a credit to Cash for $198 and a debit to Income from Services for $198.
B) a debit to Cash for $391 and a credit to Accounts Receivable for $391.
C) a debit to Accounts Receivable for $198 and a credit to Cash for $198.
D) a debit to Cash for $193 and a credit to Accounts Payable for $193.
E) a credit to Cash for $198 and a debit to Accounts Payable for $198.

Answer 1

C

Question 2

Which of the following errors, each considered separately, would cause the trial balance totals to be unequal?

A) A payment of $20 for Miscellaneous Expense was recorded as a debit of $20 to Cash and a credit of $20 to Miscellaneous Expense.
B) The amount of $326 received from customers on account was posted as a debit of $236 to Cash and a credit of $236 to Accounts Receivable.
C) A payment of $410 to a creditor was posted as a debit of $410 to Accounts Payable and a credit of $41 to Cash.
D) A payment of $18 to a creditor was posted as a debit of $180 to Accounts Payable and a credit of $180 to Cash.
E) A receipt of $36 for Income from Services was recorded as a debit to Cash for $36 and a credit to Account Receivable for $36.

Answer 2

C

Question 3

When an entry is posted, the last step in the process is

A) recording the explanation.
B) placing the account number in the Post. Ref. column of the journal.
C) placing the journal page number in the Post. Ref. column of the ledger.
D) placing the account number in the Post. Ref. column of the ledger.
E) placing the balance of the account in either the debit or credit column in the ledger.

Answer 3

B

Question 4

Which of the following is/are not true about a proper journal entry?

A) An explanation is needed immediately after each debit and immediately after each credit.
B) All credits are indented.
C) A debit is never indented, even if a liability or owner's equity account is involved.
D) All debits are listed before the first credit.
E) In a compound entry, the largest amounts are listed first.

Question 5

Which of the following errors will probably be located when preparing a trial balance?

A) Posting the debit of a journal entry as a credit and the credit as a debit
B) Failure to record an entire entry in the journal
C) Failure to post an entire entry in the ledger
D) Failure to post part of an entry
E) Posting the correct amount to the incorrect credit account

Question 6

When posting from the journal to the ledger, the accountant failed to post a $52 debit to Cash. The effect of this error will be that the

A) amounts in the journal will be in error.
B) trial balance will not balance.
C) total debits in the trial balance will be larger than the total credits.
D) Cash account balance will be overstated.
E) trial balance will not be affected.

Question 7

An accountant wanting to know the balance of a particular account would refer to the

A) ledger.
B) chart of accounts.
C) book of original entry.
D) source document.
E) journal.

Question 8

____________ furnish proof that a transaction has taken place.

A) Source documents
B) Secure documents
C) Ledgers
D) Journal entries

Question 9

The proof that the debits and credits in the ledger are equal is called the

A) trial balance.
B) journal.
C) statement of owner's equity.
D) income statement.
E) balance sheet.

Question 10

J. Jefferson invested $15,000 cash in his business. The accountant would record the following journal entry:

A)
Cash $\quad \$ 15,000$
J. Jefferson, Capital $\quad \$ 15,000$
B)
J. Jefferson, Capital $\$ 15,000$
Cash $\quad \$ 15,000$
C)
$\begin{array} { l } \text { Cash } &\$ 15,000 \\\text { Income from Services } & \$ 15,000\end{array}$
D)
J. Jefferson, Drawing $\quad\$ 15,000$
Cash $\quad \$ 15,000$

Question 11

A _________ is a book in which business transactions are recorded.

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

Question 12

The first step in the posting process is recording the

A) journal page number in the ledger account.
B) ledger account number in the journal.
C) date in the ledger account.
D) explanation in the journal.
E) debit account and amount.

Question 13

Which of the following errors, considered individually, would cause the trial balance totals to be unequal?

A) Cash received from a customer on account was posted as a credit of $120 to Cash, $120 to Income from Services, and a debit of $220 to Accounts Receivable.
B) A payment of $76 for supplies was posted as a debit of $67 to Supplies Expense and a credit of $67 to Cash.
C) A payment of $391 to a creditor was neglected to be journalized by the accountant of a company.
D) A receipt of $691 from a customer was posted as a debit of $961 to Cash and a credit of $961 to Inventory.
E) A payment of $83 to pay the telephone bill (received last week) was posted as a credit of $83 to Accounts Payable and a debit of $83 to cash.

Question 14

In the accounting process, the second step is to

A) post entries to the ledger accounts.
B) record the information from a source document.
C) prepare a trial balance.
D) record the account numbers in the journal.
E) prepare an income statement.

Question 15

A cash payment of $130 on account was recorded as a $310 debit to Accounts Payable and a $310 credit to Cash. The necessary correcting entry is

A) debit Cash, $180; credit Accounts Receivable, $180.
B) debit Accounts Payable, $180; credit Cash, $180.
C) debit Cash, $180; credit Accounts Payable, $180.
D) debit Accounts Receivable, $180; credit Cash, $180.
E) debit Cash $130, credit Accounts Payable, $130.

Question 16

If the number of an account is 211, this probably means that the account is the first account in the

A) Owner's Equity section.
B) Assets section.
C) Revenues section.
D) Liabilities section.
E) Expenses section.

Question 17

Shower Flower Company bought equipment, paying cash, $2,500. The accountant would record the following journal entry:

A)
$\begin{array} { l r } \text { Cash } & \$ 2,500 \\\text { Equipment } & \$ 2,500\end{array}$
B)
$\begin{array} { l r } \text { Equipment } & \$ 2,500 \\\text { Cash } & \$ 2,500\end{array}$
C)
$\begin{array} { l l } \text { Equipment } & \$ 2,500 \\\text { Accounts Payable } & \$ 2,500\end{array}$
D)
$\begin{array} { l } \text { Equipment Expense }\quad \$ 2,500 \\\text { Cash } \quad \$ 2,500 \\\end{array}$

Question 18

The process of subtotaling both sides of an account and recording the amount on that side is known as

A) footing.
B) taking a trial balance.
C) posting.
D) balancing the accounts.
E) journalizing.

Question 19

Apple Company purchased $6,000 in equipment, paying $2,000 in cash and placing the remainder on account. The accountant would record the following journal entry:

A)
$\begin{array} { l r } \text { Cash } & \$ 8,000 \\\text { Equipment } & \$ 8,000\end{array}$
B)
$\begin{array} { l r } \text { Equipment } & \$ 6,000 \\\text { Cash } & \$ 6,000\end{array}$
C)
$\begin{array} { l r } \text { Equipment } & \$ 8,000 \\\text { Accounts Payable } & \$ 8,000\end{array}$
D)
$\begin{array} { l c } \text { Equipment Expense } & \$ 8,000 \\\text { Accounts Payable } & \$ 6,000 \\\text { Cash } & \$ 2,000\end{array}$
E)
$\begin{array} { l r } \text { Equipment } & \$ 6,000 \\\text { Accounts Payable } & \$ 4,000 \\\text { Cash } & \$ 2,000\end{array}$

Question 20

A book of original entry is known as a

A) ledger account.
B) general ledger.
C) trial balance.
D) journal.
E) T account.

Question 21

Juan Company purchased $15,000 in equipment on account. The transaction would involve a

A) credit to Cash.
B) debit to Accounts Payable.
C) debit to Equipment Expense.
D) credit to Accounts Payable.

Question 22

Rich Company paid transport expenses of $3,000 in cash. Which of the following journal entries records this transaction?

A)
Transport Expense $\quad\$ 3,000$
Prepaid Expense $\quad \$ 3,000$
B)
Transport Expense $\quad\$ 3,000$
Cash $\quad \$ 3,000$
C)
$\begin{array} { l l } \text { Cash } & \$ 3,000 \\\text { Transport Payable } & \$ 3,000\end{array}$
D)
$\begin{array} { l r } \text { Prepaid Expense } & \$ 3,000 \\\text { Cash } & \$ 3,000\end{array}$

Question 23

Dungeon Company paid the monthly rent, $6,000. The accountant would record the following journal entry:

A)
$\begin{array} { l r } \text { Cash } & \$ 6,000 \\\text { Rent Expense } & \$ 6,000\end{array}$
B)
$\begin{array} { l r } \text { Prepaid Rent } & \$ 6,000 \\\text { Cash } & \$ 6,000\end{array}$
C)
Rent Payable $\quad\$ 6,000$
Cash $\quad \$ 6,000$
D)
Rent Expense $\quad\$ 6,000$
Cash $\quad \$ 6,000$

Question 24

Tonka Services receives a bill for a three-month liability insurance policy. The transaction would involve a

A) debit to Insurance Expense.
B) debit to Prepaid Insurance.
C) credit to Insurance Expense.
D) credit to Cash.

Question 25

Bright Services pays wages of a part-time employee. The transaction would involve a

A) debit to Wages Expense.
B) debit to Cash.
C) credit to Wages Payable.
D) credit to Prepaid Expenses.

Question 26

G. Wilson invested her personal computer, which had a fair market value of $5,000, in her business. The transaction would involve a:

A) debit to Cash.
B) debit to Accounts Receivable.
C) debit to G. Wilson, Capital.
D) debit to Equipment.

Question 27

Red Baron Company purchased supplies for cash, $1,950. The transaction would involve a

A) debit to Cash.
B) credit to Accounts Payable.
C) credit to Supplies Expense.
D) debit to Supplies.

Question 28

Avila Company paid $500 on account for rent expenses. Which of the following journal entries is recorded by the company's accountant?

A)
$\begin{array} { l c } \text { Cash } & \$ 500 \\\text { Rent Payable } & \$ 500\end{array}$
B)
Accounts Receivable $\quad\$ 500$
Cash $\quad \$ 500$
C)
Accounts Payable $\quad \$ 500$
Cash $\quad \$ 500$
D)
$\begin{array} { l r } \text { Rent Expense } & \$ 500 \\\text { Cash } & \$ 500\end{array}$

Question 29

Homer Services pays the monthly rent, $5,000. The transaction would involve a

A) debit to Prepaid Rent.
B) debit to Rent Expense.
C) credit to Rent Payable.
D) debit to Cash.

Question 30

Patrick Services paid the office rent for the current month. The transaction would involve a

A) debit to Cash.
B) debit to Rent Expense.
C) credit to Rent Payable.
D) credit to Prepaid Rent.

Question 31

For a journal entry to be complete, it must contain

A) the date.
B) a debit entry.
C) a credit entry.
D) an explanation.
E) all of the answers listed.

Question 32

The _______________ requires that assets be recorded at the actual cost.

A) business entity principle
B) matching principle
C) cost principle
D) fair value principle

Question 33

P. Baker deposits $10,000 in a bank account, in the name of his business, to be used to purchase equipment. The journal entry to record the transaction would involve a:

A) credit to Equipment.
B) credit to Cash.
C) credit to P. Baker, Capital.
D) credit to P. Baker, Drawing.

Question 34

Quick Lab Company received cash on account from patients. The transaction would involve a

A) credit to Income from Services.
B) debit to Income from Services.
C) credit to Accounts Receivable.
D) credit to Cash.

Question 35

Stonehenge Company received cash on account, $2,500. The accountant would record the following journal entry:

A)
$\begin{array} { l c } \text { Cash } & \$ 2,500 \\\text { C. Man, Capital } & \$ 2,500\end{array}$
B)
Income from Services $\quad\$ 2,500$
Cash $\quad\$ 2,500$
C)
$\begin{array} { l } \text { Cash }&\$ 2,500 \\\text { Income from Services } &\$ 2,500\end{array}$
D)
$\text { Cash } \quad \$ 2,500$
$\text { Accounts Receivable } \quad \$ 2,500$

Question 36

E. Elijah, owner, withdrew $3,000 for personal use. The accountant would record the following journal entry:

A)
$\begin{array} { l l } \text { Cash } & \$ 3,000 \\\text { E. Elijah, Capital } & \$ 3,000\end{array}$
B)
Income from Services $\quad\$ 3,000$
Cash $\quad\$ 3,000$
C)
E. Elijah, Drawing $\quad \$ 3,000$
Cash $\quad\$ 3,000$
D)
$\begin{array} { l r } \text { Wages Expense } & \$ 3,000 \\\text { Cash } & \$ 3,000\end{array}$

Question 37

J. Forest deposited $60,000 in the bank in the name of the business. The transaction would involve a

A) debit to Cash.
B) credit to Cash.
C) credit to J. Forest, Drawing.
D) debit to J. Forest, Capital.

Question 38

Cave Man Company received cash revenue, $3,500. The accountant would record the following journal entry:

A)
$\begin{array} { l c } \text { Cash } & \$ 3,500 \\\text { C. Man, Capital } & \$ 3,500\end{array}$
B)
Income from Services $\quad\$ 3,500$
Cash $\quad\$ 3,500$
C)
Cash $\quad\$ 3,500$
Income from Services $\quad\$ 3,500$
D)
$\begin{array} { l l } \text { Cash } &\$ 3,500\\\text { Accounts Receivable } & \$ 3,500 \\\end{array}$

Question 39

Beach Company receives $25,000 cash revenue for services performed. The transaction would involve a

A) credit to Cash.
B) debit to Income from Services.
C) debit to Accounts Receivable.
D) credit to Income from Services.

Question 40

Summit Company paid Hacienda Products, a creditor, on account. The transaction would involve a

A) debit to Cash.
B) credit to Accounts Payable.
C) credit to Cash.
D) debit to Expenses.

Question 41

Posting involves

A) transferring information from the income statement to the statement of owner's equity.
B) transferring information from ledger to the journal.
C) transferring information from the ledger to the balance sheet.
D) transferring information from the journal to the ledger.

Question 42

Which of the following is correct concerning correcting errors on the computer?

A) It is ok to delete an error entry on the computer.
B) If using a computer program, there will never be any errors to correct because the computer never allows errors to be recorded.
C) A correcting entry should be made with a brief explanation when correcting an error on the computer.
D) All of the answers listed are correct.

Question 43

Clark Clocks had a cash account beginning balance of $30,250 in the month of July. The accountant posted a $1,000 credit on July 3, a $630 credit on July 8, and a $3,150 debit on July 20. What is the balance of Cash in the general ledger?

A) $31,770 debit
B) $28,620 debit
C) $28,620 credit
D) $31,770 credit

Question 44

Which of the following is correct concerning recording journal entries?

A) The credit part of the entry is recorded first.
B) The credit account is always indented underneath the debit entry.
C) The debit part of the entry is recorded last.
D) Dollar signs are always recorded in the journal.

Question 45

Which of the following is true concerning the trial balance?

A) If the trial balance equals then there are no errors in the recording of journal entries.
B) A trial balance should be prepared before posting.
C) The trial balance only lists the names of the accounts, not the balances.
D) The trial balance proves only that the total ledger debit balances equal the total ledger credit balances.

Question 46

The process of writing a transaction in a ledger is called journalizing.

Question 47

A $4,500 payment for Rent Expense was incorrectly journalized and posted as a debit to Rent Expense for $5,400 and a credit to Cash for $5,400. The correcting entry, using the one-step method, would include a

A) debit to Cash for $900.
B) credit to Rent Expense for $4,500.
C) credit to Rent Expense for $5,400.
D) credit to Cash for $90.

Question 48

Which of the following is true concerning posting?

A) The date of the transaction should be written in the account's Date column.
B) The page number of the journal should be written in the Post. Ref. column of the ledger account.
C) The amount of the transaction should be recorded in either the debit or credit column.
D) The ledger account number should be recorded in the Post. Ref. column of the journal.
E) All of the answers listed are correct.

Question 49

Lohan Company had the following account balances as of June 30.
Cash $29,000
Equipment $15,000
Accounts Payable $2,800
T. Lohan, Capital $62,700
T. Lohan, Drawing $5,000
Income from Services $35,000
Rent Expense $12,000
Salaries Expense $8,000
What is the debit balance of the trial balance?

A) $141,700
B) $136,700
C) $64,000
D) $69,000

Question 50

There are two methods for correcting errors, the

A) ruling method and the manual method.
B) manual method and the correcting entry method.
C) ruling method and the correcting entry method.
D) the ruling method and the deletion method.

Question 51

Which of the following is correct?

A) The manual ruling method can only be used to correct an error in the journal before posting.
B) The correcting entry method can only be completed in two steps.
C) The manual ruling method can be used to correct an error in the ledger after an entry has been posted.
D) All of the answers listed are correct.

Question 52

Kaufman Company had a beginning normal balance of $15,000 in the accounts payable account. The accountant posted a $5,000 credit on May 6, a $2,500 credit on May 14, and a $8,000 debit on May 26. What is the balance of accounts payable in the general ledger?

A) $14,500 credit
B) $15,500 credit
C) $4,500 debit
D) $15,500 debit

Question 53

A $1,500 payment for Rent Expense was incorrectly journalized and posted as a debit to Rent Expense for $5,100 and a credit to Cash for $5,100. The correcting entry, using the one-step method, would include a

A) debit to Cash for $1,500.
B) credit to Rent Expense for $3,600.
C) credit to Rent Expense for $5,100.
D) credit to Cash for $1,500.

Question 54

During the current financial year, the owner of Omega Enterprises withdrew supplies of $2,000 for personal use. The accountant debited Rent Expense for $2,000 and credited Supplies for $2,000. This error in the journal will result in:

A) the understatement of Net Income.
B) the understatement of Supplies.
C) the understatement of Total Owner's Equity.
D) the overstatement of Supplies.
E) the understatement of Rent Expenses.

Question 55

Which of the following is true?

A) The ledger account form maintains a running balance of the account.
B) When recording business transactions, it is not important that one use the exact account titles as listed in the chart of accounts.
C) The process of transferring information from the journal to the ledger is called journalizing.
D) All of the answers listed are correct.

Question 56

Munoz Company had the following account balances as of December 31.
Cash $15,000
Equipment $7,000
Accounts Payable $4,200
R. Munoz, Capital $10,300
R. Munoz, Drawing $3,000
Income from Services $18,500
Rent Expense $6,000
Salaries Expense $2,000
What is the credit balance of the trial balance?

A) $28,800
B) $33,000
C) $25,500
D) $17,800

Question 57

During the current financial year, Omega Finance Enterprises pays $1,200 on account to a creditor. The accountant debited Rent Expense for $1,200 and credited Cash for $1,200. This entry in the journal results in:

A) the understatement of revenue.
B) the understatement of Cash.
C) the overstatement of revenue.
D) the overstatement of Cash.
E) the understatement of total liabilities.

Question 58

A $500 payment for Wages Expense was incorrectly journalized and posted as a debit to Rent Expense for $500 and a credit to Cash for $500. The correcting entry, using the one-step method, would include a

A) debit to Cash for $500.
B) credit to Rent Expense for $500.
C) credit to Supplies Expense for $500.
D) credit to Cash for $500.

Question 59

A $800 payment for Rent Expense was incorrectly journalized and posted as a debit to Wages Expense for $800 and a credit to Cash for $800. The correcting entry, using the one-step method, would include a

A) debit to Cash for $800.
B) credit to Rent Expense for $800.
C) credit to Wages Expense for $800.
D) credit to Cash for $800.

Question 60

The ____________ is a book or file containing the activity by accounts of a business.

A) general ledger
B) journal
C) trial balance
D) income statement

Question 61

The account number is recorded in the Post. Ref. column of the general journal when the transaction is first recorded in the journal.

Question 62

A ledger account contains a complete record of the transaction activity in that account.

Question 63

In the general journal, all liability accounts and owner's equity accounts must be indented.

Question 64

When preparing the trial balance, record the balances of the accounts in the order in which they appear in the general ledger.

Question 65

One type of ledger account form has a two-balance-column arrangement.

Question 66

Posting an entire transaction twice will cause the trial balance totals to be unequal.

Question 67

The explanation for a transaction in the general journal in a manual system is indented under the credit part of the entry.

Question 68

The process of transferring account amounts from the book of original entry to the general ledger is called posting.

Question 69

The general ledger shows a complete record of the transactions recorded in each individual account.

Question 70

The Item column in the ledger is mostly used at the end of a financial period to make brief notations about end-of-period entries.

Question 71

To keep the fundamental accounting equation in balance, debits and credits must be in balance and equal amounts must be on each side of the equation.

Question 72

The official list of all the accounts is called the chart of accounts.

Question 73

Failure to post an entire transaction will not be reflected in the trial balance.

Question 74

If an entry is correctly journalized, but posted to the incorrect accounts, with equal debits and credits, the trial balance will still be out of balance.

Question 75

In a manual system, it is not proper to split a journal entry at the bottom of a page.

Question 76

If an entry is recorded twice, the error will show up in the trial balance.

Question 77

When a month's transactions have been posted, the Accounts Payable account will only have debit entries.

Question 78

Accidentally recording the $300 debit of a transaction twice and the credit only once will cause the trial balance totals to differ by $300.

Question 79

The general ledger is a collection of all the accounts.

Question 80

The first step in the posting process is to write the amount of the transaction in the ledger account.