Question 1

Given the following list of errors,determine the effect on assets,liabilities,and shareholders' equity by completing the chart below.Use (+)to indicate overstated,(-)to indicate understated,and (0)to indicate no effect.Transaction (a)is completed as an example.
a.The entry to record the purchase of $800 of equipment on account was never posted.
b.The entry to record the purchase of $100 of supplies for cash was posted as a debit to Supplies and a credit to Accounts Payable.
c.A $1,000 debit to Cash was posted as $100.
d.A $400 debit to the Accounts Payable account was never posted.
e.A debit to Accounts Receivable of $500 was posted as a credit to Accounts Receivable.
  b.
c.
d.
e.

Accepted Answer

The answer of Given the following list of errors,determine the...

Question 2

Which of the following items of information would not normally be included in a journal entry?

Accepted Answer

The location where the transaction took place is not relevant to the journal entry and therefore would not typically be included. The date, dollar amount, and title of the account debited are all essential pieces of information that would be included in a journal entry.

Question 3

What is the first step in the journalizing process?

Accepted Answer

The first step in the journalizing process is to identify the transaction from source documents and other information. This ensures that all relevant information is captured accurately and completely before the transaction is recorded in the journal.

Question 4

Which of the following items would not be included in the journal entry for a transaction?

Accepted Answer

The names of the source documents used to record the accounting transaction are not typically included in the journal entry. The journal entry would include the titles of the accounts used, the date of the transaction, and the dollar amounts for the debits and credits.

Question 5

The accounting process of copying of amounts from the journal to the appropriate ledger accounts is referred to as:

Accepted Answer

Posting is the process of transferring the debits and credits from the journal entries to the respective accounts in the ledger. It is an important step in the accounting process as it helps to maintain accurate and up-to-date records of all financial transactions. Journalizing refers to the recording of transactions in the journal, footing refers to the adding up of columns in the journal or ledger, and balancing refers to ensuring that the total debits are equal to the total credits in an account.

Question 6

State the increase side (debit or credit)for each of the following accounts.
a.Inventory
b.Retained earnings
c.Cash
d.Accounts Payable
e.Dividends
f.Land
g.Supplies
h.Common Shares
i.Service Revenue
j.Accounts Receivable

Accepted Answer

The answer of State the increase side (debit or credit)for...

Question 7

The purchase of a building with a down payment of cash and the signing of a note payable for the remainder would include a debit to both the asset Building,and a credit to the asset Cash and the liability Note Payable.

Accepted Answer

This transaction involves a cash purchase of a building with a down payment and the signing of a note payable for the remainder. The down payment would be recorded as a debit to the asset Building, and a credit to the asset Cash. The remainder of the purchase would be recorded as a debit to the asset Building and a credit to the liability Note Payable. Therefore, both assets (Building and Cash) and the liability (Note Payable) are affected, resulting in a double-entry accounting transaction.

Question 8

Define the term account and describe the relationship between accounts and the ledger.

Accepted Answer

The answer of Define the term account and describe the...

Question 9

Every transaction affects at least two accounts.

Accepted Answer

Every transaction involves a debit to one account and a credit to another account. Therefore, two accounts are always affected by a transaction.

Question 10

Place a checkmark in the appropriate column to show whether the event is recorded as a debit or a credit

Accepted Answer

The answer of Place a checkmark in the appropriate column...

Question 11

An expense account is known as a contra equity account.

Accepted Answer

The answer of An expense account is known as a...

Question 12

In accounting,the process of posting is:

Accepted Answer

Posting involves transferring information from the journal (where transactions are initially recorded) to the ledger (where the accounting records are maintained). Therefore, option B is the correct choice. Option A is not correct as it refers to the opposite process. Option C is also incorrect because it refers to the initial step of recording transactions, and option D refers to a step that precedes posting.

Question 13

Every accounting transaction involves an increase in at least one account and a decrease in at least one other account.

Accepted Answer

The answer of Every accounting transaction involves an increase in...

Question 14

State the decrease side (debit or credit)for each of the following accounts.
a.Prepaid Expenses
b.Contributed Capital
c.Buildings
d.Unearned Revenue
e.Dividends
f.Notes Receivable
g.Interest Payable
h.Sales Revenue
i.Cost of Sales

Accepted Answer

The answer of State the decrease side (debit or credit)for...

Question 15

Accounting transactions are first recorded in a book or record called a:

Accepted Answer

Accounting transactions are first recorded in a book or record called a journal. From there, the transactions are posted to the appropriate accounts in the ledger. Source documents provide the evidence or proof of the transaction and are used to support the entries in the journal.

Question 16

Posting,a part of the accounting process,refers to:

Accepted Answer

Posting involves transferring data from the journal to the relevant accounts in the general ledger. This helps to keep the ledger up-to-date and accurate, and enables the preparation of financial statements. Therefore, option C is the correct answer.

Question 17

The Dividends account normally has a debit balance.

Accepted Answer

The Dividends account represents distributions to shareholders and is decreased by credits and increased by debits, thus it normally has a debit balance as it records the amounts paid out to shareholders.

Question 18

A chronological record (or history)of an entity's transactions is called a(n):

Accepted Answer

A journal is a chronological record (or history) of an entity's transactions. It is the first step in the accounting process and provides a complete record of all financial transactions. The entries in the journal are then posted to the appropriate accounts in the general ledger. Accounts are used to summarize and classify similar transactions, while source documents provide evidence of transactions, such as invoices or receipts.

Question 19

Which element of an accounting system provides information about the balance in each account?

Accepted Answer

Ledgers provide information about the balance in each account. Source documents provide the original transaction information, journals record transactions in chronological order, and the cash flow statement provides information about the inflows and outflows of cash during a period.

Question 20

The purchase of office supplies for cash would include a debit to the asset Office Supplies and a credit to the asset Cash.

Accepted Answer

This transaction would result in a decrease of cash (credit) and an increase of office supplies (debit).

Quiz 2: Recording Business Transactions