Question 1

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

Accepted Answer

The dividends account is not a subdivision of the retained earnings account. Rather, it is a separate account that reflects payments made to shareholders. Dividends do not appear as an expense on the income statement; instead, they are shown as a deduction from the accumulated profits in the retained earnings statement.

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?

Accepted Answer

The transaction is complete because the total debits equal the total credits.

Question 3

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

Accepted Answer

True

Question 4

The usual sequence of steps in the recording process is to

Accepted Answer

The correct sequence for recording transactions in accounting involves first analyzing each transaction to understand its financial impact. Then, the transaction is entered into the journal, which is the book of original entry. Finally, the information from the journal is transferred to the ledger accounts, where it is organized by account.

Question 5

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

Accepted Answer

Journals and ledgers are specifically designed to organize and manage large volumes of transactions efficiently by categorizing them into different accounts for easy tracking and reporting, whereas a simple tabular form might lack the structure to handle complex accounting needs effectively.

Question 6

Which of the following statements is not true?

Accepted Answer

Expenses are not a factor that increases stockholders' equity. Instead, expenses decrease stockholders' equity as they represent costs incurred by the company to generate revenue.

Question 7

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

Accepted Answer

A trial balance is simply a list of all the accounts and their balances. It is used to verify that the total debits equal the total credits in the ledger. However, it does not guarantee that all transactions have been recorded or that the ledger is correct. Errors can still occur, such as omitting a transaction or making a posting error.

Question 8

A T-account is

Accepted Answer

A T-account is a simple and commonly used tool in accounting to depict the basic form of an account. It consists of two sides: the left side is the debit side and the right side is the credit side. The account name is written on top of the T, and the transactions related to that account are recorded on either the debit or credit side, depending on whether it increases or decreases the account balance.

Question 9

An account consists of

Accepted Answer

An account includes a title and two sides - a debit side and a credit side. The debit side records increases and the credit side records decreases. There is no left or right side in accounting terminology. The debit and credit balances are recorded on their respective sides.

Question 10

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

Accepted Answer

Posting is the process of transferring entries from the journal into the ledger accounts, not proving the equality of debits and credits in the trial balance.

Question 11

Which of the following correctly identifies normal balances of accounts?

Accepted Answer

The answer of Which of the following correctly identifies normal...

Question 12

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

Accepted Answer

The answer of The account titles used in journalizing transactions...

Question 13

The best interpretation of the word credit is the

Accepted Answer

Credits are recorded on the right side of an account in double-entry bookkeeping.

Question 14

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

Accepted Answer

Transactions are first recorded in journals and then transferred to ledger accounts.

Question 15

The recording process occurs

Accepted Answer

The recording process occurs repeatedly during the accounting period, as transactions happen throughout the period and must be recorded in a timely manner to ensure accurate financial statements. In a manual accounting system, this would require frequent updates to the general ledger and subsidiary ledgers.

Question 16

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

Accepted Answer

The answer of Which of the following is not true...

Question 17

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

Accepted Answer

The double-entry system requires that each transaction is recorded in at least two different accounts, typically a debit in one account and a corresponding credit in another account, in order to maintain the balance between assets, liabilities, and equity. Recording transactions in two sets of books or as revenue and expense is not part of the double-entry system. Recording transactions in a journal and ledger is a common practice within the double-entry system.

Question 18

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

Accepted Answer

A compound journal entry involves multiple debits and/or credits to various accounts, not just several debits and credits to one account each.

Question 19

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

Accepted Answer

The answer of Which one of the following represents the...

Question 20

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

Accepted Answer

The answer of A general ledger should be arranged in...

Quiz 3: The Recording Process