Question 1

Posting involves

Accepted Answer

Posting involves transferring information from the journal to the ledger. The journal is used to record transactions in chronological order, while the ledger is used to group transactions by account type (such as accounts payable or accounts receivable). Posting ensures that all transactions are accurately recorded in the appropriate accounts in the ledger.

Question 2

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

Accepted Answer

When correcting an error on the computer, it is important to make a correcting entry with a brief explanation to ensure accuracy and transparency in financial records. Deleting an error entry is not recommended as it can lead to inconsistencies in the records, and assuming that there will never be errors to correct when using a computer program is not realistic. Therefore, option C is the correct choice.

Question 3

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?

Accepted Answer

The beginning balance was a debit of $30,250. Credits reduce the debit balance, and debits increase it. After posting a $1,000 credit and a $630 credit, the total credits equal $1,630. Subtracting this from the beginning balance gives $28,620. Then, adding a $3,150 debit increases the balance to $31,770 debit.

Question 4

Which of the following is correct concerning recording journal entries?

Accepted Answer

In a journal entry, the debit account is always recorded first and indented underneath it, the credit account is recorded second. The indent is done to distinguish between debit and credit entries easily. There is no requirement to use dollar signs in journal entries.

Question 5

Which of the following is true concerning the trial balance?

Accepted Answer

The trial balance is a tool used to ensure that the total debit balances equal the total credit balances in the ledger. It does not guarantee that there are no errors in the recording of journal entries. A trial balance is prepared after posting, and it lists both the names of the accounts and their balances.

Question 6

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

Accepted Answer

The process of writing a transaction in a ledger is called posting. Journalizing is the process of recording transactions in a journal before they are posted to a ledger.

Question 7

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

Accepted Answer

The error resulted in an overstatement of both Rent Expense and Cash by $900 ($5,400 - $4,500). To correct this, Cash should be debited (increased) by $900 to offset the previous overstatement.

Question 8

Which of the following is true concerning posting?

Accepted Answer

All of the statements A through D are correct practices in the posting process. A) ensures that each entry in the ledger is dated for chronological tracking. B) links the ledger entry back to the original journal entry for traceability. C) is a fundamental rule of double-entry bookkeeping, where every transaction is recorded in both a debit and a credit column. D) facilitates the tracking of transactions from the journal to the specific ledger account, enhancing the audit trail.

Question 9

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?

Accepted Answer

The answer of Lohan Company had the following account balances...

Question 10

There are two methods for correcting errors, the

Accepted Answer

The two methods for correcting errors are the ruling method and the correcting entry method. The ruling method involves drawing a line through the incorrect entry and writing the correct entry above it. The correcting entry method involves making a new entry to correct the error. The manual method and deletion method are not commonly used for correcting errors in accounting.

Question 11

Which of the following is correct?

Accepted Answer

The manual ruling method involves drawing a line through the incorrect entry and writing the correct entry above it. It can be used to correct errors in the ledger even after an entry has been posted. Option A is incorrect as manual ruling can be done even after posting. Option B is incorrect as the correcting entry method can have more than two steps depending on the transaction. Option D is incorrect as option B is wrong.

Question 12

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?

Accepted Answer

The beginning balance is a $15,000 credit. Credits increase accounts payable, and debits decrease it. After posting a $5,000 credit and a $2,500 credit, the balance increases by $7,500 to $22,500. The $8,000 debit decreases it to $14,500 credit.

Question 13

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

Accepted Answer

To correct the error, we need to reverse the incorrect entry by debiting Cash for $1,500 (the actual amount paid for rent) and crediting Rent Expense for $3,600 (the difference between the incorrect amount and the actual amount of rent expense). Therefore, the correcting entry would be a credit to Rent Expense for $3,600 and a debit to Cash for $1,500, using the one-step method. Choice B correctly reflects these account amounts.

Question 14

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:

Accepted Answer

The error will result in the understatement of Net Income because the Rent Expense account will be overstated by $2,000 and the Supplies account will be understated by $2,000. This will result in a decrease in Net Income of $2,000.

Question 15

Which of the following is true?

Accepted Answer

The ledger account form is designed to maintain a running balance of the account, allowing for easy monitoring of transactions and account activity.

Answer: B is false. It is important to use the correct account titles in order to ensure accurate record keeping and to facilitate analysis and reporting.

Answer: C is false. The process of transferring information from the journal to the ledger is called posting, not journalizing.

Therefore, the best answer is A.

Question 16

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?

Accepted Answer

The credit balance of the trial balance includes Accounts Payable, R. Munoz, Capital, and Income from Services, which sum up to $4,200 + $10,300 + $18,500 = $33,000.

Question 17

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:

Accepted Answer

The answer of During the current financial year, Omega Finance...

Question 18

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

Accepted Answer

To correct the journal entry, the Rent Expense account needs to be debited for the $500 that was incorrectly credited to Cash. The correct entry would be a debit to Rent Expense for $500 and a credit to Wages Expense for $500. Since the question asks for the correcting entry using the one-step method, we can combine these two entries into one, resulting in a credit to Rent Expense for $500. None of the other accounts listed (Cash, Supplies Expense) are relevant to this correction.

Question 19

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

Accepted Answer

The correct entry to correct the mistake involves crediting Wages Expense for $800 to reverse the incorrect entry and debiting Rent Expense for the same amount to record the expense in the correct account.

Question 20

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

Accepted Answer

A general ledger is a book or file that contains the activity by accounts of a business. It is the central location for all financial transactions that occur within a company. The journal is used to record individual transactions as they occur, which are later summarized in the general ledger. The trial balance is a report that lists all the accounts and their balances to ensure that debits and credits are equal. The income statement shows the company's revenues and expenses for a specific period.

Quiz 3: The General Journal and the General Ledger