Deck 3: The Recording Process

Question 1

The dividends account is a subdivision of the retained earnings account and appears as an expense on the income statement.

Answer 1

False

Question 2

An accountant has debited an asset account for $2,000 and credited a liability account for $1,000.What can be done to complete the recording of the transaction?

A)Nothing further must be done.
B)Debit a stockholders' equity account for $1,000.
C)Debit another asset account for $1,000.
D)Credit a different asset account for $1,000.

Answer 2

A

Question 3

A debit to an account always indicates an increase in that account.

Answer 3

True

Question 4

The usual sequence of steps in the recording process is to

A)analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts.
B)analyze each transaction, enter the transaction in the ledger, and transfer the information to the journal.
C)analyze each transaction, enter the transaction in the book of accounts, and transfer the information to the journal.
D)analyze each transaction, enter the transaction in the book of original entry, and transfer the information to the journal.

Question 5

When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.

Question 6

Which of the following statements is not true?

A)Expenses increase stockholders' equity.
B)Expenses have normal debit balances.
C)Expenses decrease stockholders' equity.
D)Expenses are a negative factor in the calculation of net income.

Question 7

A trial balance does not prove that all transactions have been recorded or that the ledger is correct.

Question 8

A T-account is

A)a way of depicting the basic form of an account.
B)what the computer uses to organize bytes of information.
C)a special account used instead of a trial balance.
D)used for accounts that have both a debit and credit balance.

Question 9

An account consists of

A)a title, a debit balance, and a credit balance.
B)a title, a left side, and a debit balance.
C)a title, a debit side, and a credit side.
D)a title, a right side, and a debit balance.

Question 10

Posting is the process of proving the equality of debits and credits in the trial balance.

Question 11

Which of the following correctly identifies normal balances of accounts?

A)
$\begin{array}{llcc} \text { Assets } &\text { Debit} \\ \text { Liabilities} &\text { Credit}\\ \text { Common Stock } &\text {Credit} \\ \text { Revenues } &\text { Debit}\\ \text { Expenses } &\text { Credit}\\\end{array}$



B)
. $\begin{array}{llcc} \text { Assets } &\text { Debit} \\ \text { Liabilities} &\text { Credit}\\ \text { Common Stock } &\text {Credit} \\ \text { Revenues } &\text {Credit}\\ \text { Expenses } &\text { Credit}\\\end{array}$

C)
$\begin{array}{llcc} \text { Assets } &\text { Credit} \\ \text { Liabilities} &\text { Debit}\\ \text { Common Stock } &\text {Debit} \\ \text { Revenues } &\text {Credit}\\ \text { Expenses } &\text { Debit}\\\end{array}$

D)
$\begin{array}{llcc} \text { Assets } &\text {Debit} \\ \text { Liabilities} &\text { Credit }\\ \text { Common Stock } &\text {Credit} \\ \text { Revenues } &\text {Credit}\\ \text { Expenses } &\text { Debit}\\\end{array}$

Question 12

The account titles used in journalizing transactions should be identical to the account titles in the ledger.

Question 13

The best interpretation of the word credit is the

A)offset side of an account.
B)increase side of an account.
C)right side of an account.
D)decrease side of an account.

Question 14

Transactions are entered in the ledger accounts and then transferred to journals.

Question 15

The recording process occurs

A)once a year.
B)once a month.
C)repeatedly during the accounting period.
D)infrequently in a manual accounting system.

Question 16

Which of the following is not true of the terms debit and credit?

A)They can be abbreviated as Dr.and Cr.
B)They can be interpreted to mean increase and decrease.
C)They can be used to describe the balance of an account.
D)They can be interpreted to mean left and right.

Question 17

The double-entry system requires that each transaction must be recorded

A)in at least two different accounts.
B)in two sets of books.
C)in a journal and in a ledger.
D)first as a revenue and then as an expense.

Question 18

A compound journal entry requires several debits to one account and several credits to one account.

Question 19

Which one of the following represents the expanded basic accounting equation?

A)Assets = Liabilities + Common Stock + Dividends - Revenue - Expenses.
B)Assets + Dividends + Expenses = Liabilities + Common Stock + Revenues.
C)Assets - Liabilities - Dividends = Common Stock + Revenues - Expenses.
D)Assets = Revenues + Expenses - Liabilities.

Question 20

A general ledger should be arranged in statement order beginning with the balance sheet accounts.

Question 21

When two accounts are required in one journal entry, the entry is referred to as a

A)balanced entry.
B)simple entry.
C)posting.
D)nominal entry.

Question 22

The procedure of transferring journal entries to the ledger accounts is called

A)journalizing.
B)analyzing.
C)reporting.
D)posting.

Question 23

The first step in designing a computerized accounting system is the creation of the

A)general ledger.
B)general journal.
C)trial balance.
D)chart of accounts.

Question 24

Another name for journal is

A)listing.
B)book of original entry.
C)book of accounts.
D)book of source documents.

Question 25

The standard format of a journal would not include a(n)

A)reference column.
B)account title column.
C)T-account.
D)date column.

Question 26

Transactions in a journal are initially recorded in

A)account number order.
B)dollar amount order.
C)alphabetical order.
D)chronological order.

Question 27

Which of the following journal entries is recorded correctly and in the standard format?

A) Wages Expense..................... $\quad$ 1,500
$\quad$ Cash..................................... $\quad$ $\quad$$\quad$ 2,000
$\quad$ Advertising Expense............... $\quad$ 500

B) Wages Expense........................ $\quad$ 1,500
$\quad$ Advertising Expense..................... $\quad$$\quad$ 500
$\quad$$\quad$ Cash..................................... $\quad$ 2,000

C) Cash........................................ $\quad$ 2,000
$\quad$ Wages Expense......................... $\quad$$\quad$$\quad$ 1,500
$\quad$ Advertising Expense............... $\quad$$\quad$$\quad$$\quad$ 500

D) Wages Expense.......................... $\quad$ 1,500
$\quad$ Advertising Expense..................... $\quad$ 500
$\quad$$\quad$ Cash........................................... $\quad$$\quad$$\quad$ 2,000

Question 28

A chart of accounts for a business firm

A)is a graph.
B)indicates the amount of profit or loss for the period.
C)lists the accounts and account numbers that identify their location in the ledger.
D)shows the balance of each account in the general ledger.

Question 29

A number in the reference column in a general journal indicates

A)that the entry has been posted to a particular account.
B)the page number of the journal.
C)the dollar amount of the transaction.
D)the date of the transaction.

Question 30

Customarily, a trial balance is prepared

A)at the end of each day.
B)after each journal entry is posted.
C)at the end of an accounting period.
D)only at the inception of the business.

Question 31

On February 1, 2008 Sofia Sedgebush buys a oven for her bed & breakfast and finances this purchase with cash and a note.When journalizing this transaction, she will

A)use two journal entries.
B)make a compound entry.
C)make a simple entry.
D)list the credit entries first, which is proper form for this type of transaction.

Question 32

Which one of the following is not an advantage of a computerized accounting system?

A)speed
B)comprehension
C)efficiency
D)accuracy

Question 33

A list of accounts and their balances at a given time is called

A)a journal.
B)a posting.
C)a trial balance.
D)an income statement.

Question 34

A journal provides

A)the balances for each account.
B)information about a transaction in several different places.
C)a list of all accounts used in the business.
D)a chronological record of transactions.

Question 35

The process of entering an amount on the left side of an account is called _________________ the account, and making an entry on the right side is called _________________ the account.

Question 36

The usual ordering of accounts in the general ledger is

A)assets, liabilities, stockholders' equity, revenues, and expenses.
B)assets, liabilities, stockholders' equity, expenses, and revenues.
C)liabilities, assets, stockholders' equity, revenues, and expenses.
D)stockholders' equity, assets, liabilities, expenses, and revenues.

Question 37

Posting

A)should be performed in account number order.
B)accumulates the effects of journalized transactions in the individual accounts.
C)involves transferring all debits and credits on a journal page to the trial balance.
D)is accomplished by examining ledger accounts and seeing which ones need updating.

Question 38

An _______________ is a record of increases and decreases in specific asset, liability, and stockholders' equity items.

Question 39

A record of increases and decreases in specific asset, liability, and stockholders' equity items is called a

A)compound entry.
B)general journal.
C)general ledger.
D)chart of accounts.

Question 40

A trial balance is a listing of

A)transactions in a journal.
B)the chart of accounts.
C)general ledger accounts and balances.
D)the totals from the journal pages.

Question 41

The basic steps in the recording process are: _______________ each transaction, enter the transaction in a ______________, and transfer the _______________ information to appropriate accounts in the ________________.

Question 42

When three or more accounts are required in one journal entry, the entry is referred to as a ________________ entry.

Question 43

The five subdivisions of stockholders' equity are: ______________, _______________, _________________, __________________, and _________________.