Question 1

The process of transferring data from the general journal to the general ledger is called:
A)Journalizing
B)Ledgerizing
C)Posting
D)Balancing

Accepted Answer

Posting is the process of transferring data from the general journal to the general ledger. Journalizing refers to recording transactions in the general journal, ledgerizing is not a standard accounting term, and balancing refers to ensuring that the debits and credits in an account or financial statement are equal.

Question 2

Which of the following is a listing of all the account balances at a specific point in time?
A)The balance sheet.
B)The chart of accounts.
C)The general ledger.
D)The trial balance.

Accepted Answer

The trial balance is a listing of all the account balances (debit and credit) at a specific point in time, usually at the end of an accounting period. It is used to ensure that the total value of debits equals the total value of credits, and to identify any discrepancies or errors in the accounts. The balance sheet is a financial statement that presents the assets, liabilities, and equity of a business at a specific point in time. The chart of accounts is a listing of all the accounts used by a business, and the general ledger is a record of all the transactions that affect the accounts in the chart of accounts. Neither of these options directly provides a listing of all the account balances at a specific point in time.

Question 3

Which of the following is the first step in the accounting cycle?
A)Recognize that a transaction has occurred
B)Prepare a source document
C)Prepare a chart of accounts
D)Journalize a transaction

Accepted Answer

C

Question 4

Which of the following accounts normally has a debit balance?
A)Accounts payable
B)Retained earnings
C)Land
D)Sales revenue

Accepted Answer

Asset accounts, such as Land, normally have a debit balance. The increase in Land is recorded as a debit and decrease as a credit, maintaining a positive debit balance. Accounts payable, retained earnings, and sales revenue are liability, equity, and revenue accounts, respectively, which all normally have a credit balance.

Question 5

Which of the following accounts would have a balance that carries over from one period to the next?
A)Revenue
B)Insurance expense.
C)Prepaid insurance.
D)Dividends declared.

Accepted Answer

Prepaid insurance is an asset account that represents the amount of insurance paid in advance. As the coverage period decreases, the balance decreases until it reaches zero at the end of the coverage period. Therefore, it carries over from one period to the next. The other accounts listed - Revenue, Insurance expense, and Dividends declared - are all temporary accounts that start with a zero balance at the beginning of each period and are closed out at the end of the period.

Question 6

The chart of accounts is:__________________
A)static
B)dynamic
C)not generally useful
D)contains only permanent accounts

Accepted Answer

The chart of accounts is dynamic as it can be modified and updated to adapt to the changing needs of a business.

Question 7

Which of the following accounts normally has a debit balance?
A)Accumulated amortization
B)Prepaid insurance
C)Accounts payable
D)Common shares

Accepted Answer

Prepaid insurance is an asset account that represents the amount paid for insurance coverage that has not yet been used up. As an asset, it normally has a debit balance. Accumulated amortization, accounts payable, and common shares are all different types of accounts that can have either a debit balance or a credit balance depending on the specific transaction.

Question 8

Which of the following relationships best expresses the double-entry nature of an accounting system?
A)assets = liabilities
B)assets = debits
C)liabilities = credits
D)debits = credits

Accepted Answer

In a double-entry system, every transaction involves two or more accounts and the total debits must equal total credits. This is expressed through the relationship of debits = credits. Therefore, option D is correct. Options A and B are incomplete and do not reflect the double-entry nature of the system, while option C only shows the relationship between liabilities and credits, ignoring the existence of debits in the system.

Question 9

Which of the following would normally be recorded with an adjusting entry?
A)Sales on account.
B)Payment for supplies bought on account.
C)Wage expense
D)Amortization expense.

Accepted Answer

Amortization expense is a non-cash expense that represents the gradual reduction in value of an asset over time. It is typically recorded with an adjusting entry at the end of an accounting period. Sales on account, payment for supplies bought on account, and wage expense are all typically recorded through normal transactions and would not require an adjusting entry.

Question 10

Which of the following sequences concerning the accounting cycle is correct?
A)Journalize, post, adjusting entries, financial statements
B)Transaction analysis, trial balance, post, adjusted trial balance
C)Post, adjusting entries, closing entries, financial statements
D)Adjusting entries, closing entries, adjusted trial balance, financial statements

Accepted Answer

The correct sequence for the accounting cycle starts with journalizing transactions, then posting those transactions to the ledger, followed by making adjusting entries, and finally preparing the financial statements. This sequence ensures that all transactions are recorded, adjustments are made for accruals and deferrals, and the financial statements accurately reflect the company's financial position.

Question 11

Which of the following accounts normally has a credit balance?
A)Accumulated amortization
B)Accounts receivable
C)Dividends declared
D)Rent expense

Accepted Answer

Accumulated amortization is a contra asset account, which means it has an opposite balance to its corresponding account (in this case, the asset being depreciated or amortized). Since assets normally have debit balances, their contra accounts (like accumulated amortization) normally have credit balances.

Question 12

Which of the following accounting records is in chronological order?
A)The chart of accounts.
B)The general journal.
C)The general ledger.
D)The income statement.

Accepted Answer

The general journal is the primary accounting record kept in chronological order, with transactions recorded in the order in which they occurred. The chart of accounts is a listing of all accounts used by the company, but is not necessarily in chronological order. The general ledger is a summary of all transactions by account, but it is organized by account type rather than by date. The income statement is a financial statement that shows the company's revenues and expenses over a period of time, such as a month, quarter, or year, but it is not a chronological record of transactions.

Question 13

Which of the following statements is true?
A)The normal balance is always on the side of the T account that is increasing.
B)The normal balance is always on the side of the T account that is decreasing.
C)The normal balance is always on the debit side of the T account.
D)The normal balance is always on the credit side of the T account.

Accepted Answer

The normal balance of an account refers to the side (debit or credit) where increases to the account are recorded. This means for assets and expenses, the normal balance is on the debit side, and for liabilities, equity, and revenue, it's on the credit side. Therefore, the statement that the normal balance is always on the side of the T account that is increasing is correct.

Question 14

Which of the following statements regarding the retained earnings account is NOT true?
A)It normally has a credit balance.
B)Its balance is increased by revenues.
C)Its balance is decreased by expenses.
D)Its balance is increased by the declaration of dividends.

Accepted Answer

The retained earnings account balance is not increased by the declaration of dividends; instead, it is decreased. Retained earnings represent the cumulative amount of earnings of a company that have not been distributed to shareholders as dividends. When dividends are declared, they reduce the amount of retained earnings because they represent a distribution of the company's earnings to its shareholders.

Question 15

Which of the following types of accounts appear on the balance sheet and income statement respectively?
$$\begin{array} { | l | l | l | } 
\hline & \text { Balance } & \text { Income } \
&\text { sheet } & { \text { statement } } \
\hline \text { a. } & \text { Permarient accounts } & \text { Permarent accounts } \
\hline \text { b. } & \text { Perrianent accounts } & \text { Termporary accounts } \
\hline \text { c. } & \text { Terporary accounts } & \text { Permarent accounts } \
\hline \text { d. } & \text { Ternporary accounts } & \text { Ternporary accounts } \
\hline
\end{array}$$

Accepted Answer

The answer of Which of the following types of accounts...

Question 16

The process of identifying and recording transactions is called:
A)transaction analysis
B)posting
C)recognizing
D)journalizing

Accepted Answer

The process of identifying and recording transactions is called journalizing.

Question 17

Which of the following types of entries is used to reset the temporary accounts to zero and update the balance in the retained earnings?
A)Journal entries
B)Adjusting entries
C)Closing entries
D)Balancing entries

Accepted Answer

Closing entries are used to reset the temporary accounts (e.g., revenue, expenses) to zero and transfer their balances to the retained earnings. This process updates the balance in the retained earnings and prepares the accounts for the next accounting period.

Question 18

A deficit occurs when:
A)Assets exceed liabilities.
B)Expenses exceed revenues for the year.
C)Dividends exceed income for the year.
D)Cumulative expenses and dividends have exceeded income.

Accepted Answer

A deficit occurs when cumulative expenses and dividends have exceeded income.

Question 19

The right side of a T account is also known as the:
A)debit side.
B)credit side.
C)asset side.
D)liability side.

Accepted Answer

The right side of a T account is known as the credit side. This is where credits are recorded, representing increases in liabilities, equity, and revenue, and decreases in assets and expenses.

Question 20

Which of the following accounts normally has a credit balance?
A)Cash
B)Dividends declared
C)Insurance expense
D)Retained earnings

Accepted Answer

Retained earnings is a cumulative account that tracks the net income or net loss of a company over time. Since net income is credited and net loss is debited, the balance of retained earnings is normally a credit balance. A positive credit balance indicates that the company has earned more than it has distributed in dividends, while a negative balance indicates the opposite.

Quiz 3: Processing Data Through the Accounting System

The process of transferring data from the general journal to the general ledger is called:

Which of the following is a listing of all the account balances at a specific point in time?

Which of the following is the first step in the accounting cycle?

Which of the following accounts normally has a debit balance?

Which of the following accounts would have a balance that carries over from one period to the next?

The chart of accounts is:__________________

Which of the following accounts normally has a debit balance?

Which of the following relationships best expresses the double-entry nature of an accounting system?

Which of the following would normally be recorded with an adjusting entry?

Which of the following sequences concerning the accounting cycle is correct?

Which of the following accounts normally has a credit balance?

Which of the following accounting records is in chronological order?

Which of the following statements is true?

Which of the following statements regarding the retained earnings account is NOT true?

The process of identifying and recording transactions is called:

Which of the following types of entries is used to reset the temporary accounts to zero and update the balance in the retained earnings?

A deficit occurs when:

The right side of a T account is also known as the:

Which of the following accounts normally has a credit balance?