Question 1

The usual sequence of steps in the transaction recording process is:

Accepted Answer

The correct sequence for recording transactions in accounting is to first analyze the transaction, then record it in the journal, and finally post it to the ledger.

Question 2

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

Accepted Answer

When three or more accounts are required in a journal entry, it is called a compound entry. This is because it involves multiple transactions that are combined into one entry.

Question 3

At December 1, 2010, Gibson Company's accounts receivable balance was $1,200. During December, Gibson had credit revenues of $5,000 and collected accounts receivable of $4,000. At December 31, 2010, the accounts receivable balance is

Accepted Answer

Starting accounts receivable balance: $1,200
Credit revenues during December: $5,000
Total accounts receivable during December: $6,200
Total collections during December: $4,000

Ending accounts receivable balance: $6,200 - $4,000 = $2,200 debit.

Question 4

The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the

Accepted Answer

The recording process begins with analyzing each transaction, then entering the transaction in the journal, and finally transferring the information to the ledger accounts. The journal is the book of original entry where all transactions are recorded in chronological order. The ledger is a book of accounts where transactions for each account are summarized in one place. Therefore, option A is the correct sequence of steps in the recording process.

Question 5

The final step in the recording process is to transfer the journal information to the

Accepted Answer

The journal is used to record transactions as they occur, but the ledger is where each individual account is kept and where transactions are summarized. Therefore, transferring the journal information to the ledger is the final step in the recording process. The trial balance is prepared after the ledger has been updated, and the financial statements are prepared using information from the trial balance and other sources. The file cabinets are used to store the physical records, but they are not directly involved in the recording process.

Question 6

At October 1, 2010, Padilla Industries had an accounts payable balance of $30,000. During the month, the company made purchases on account of $25,000 and made payments on account of $40,000. At October 31, 2010, the accounts payable balance is

Accepted Answer

Beginning balance of accounts payable = $30,000
Purchases on account = $25,000
Payments made on account = $40,000

To find the ending balance of Accounts Payable, we have to subtract payments made on account from beginning balance and add new purchases.

Ending balance of accounts payable = Beginning balance + Purchases on account - Payments made on account
= $30,000 + $25,000 - $40,000
= $15,000

Therefore, the correct answer is C) $15,000.

Question 7

The recording process occurs

Accepted Answer

The recording process occurs repeatedly during the accounting period to ensure that all transactions are accurately recorded and up-to-date. In a manual accounting system, this process may be more time-consuming and occur less frequently, but in a computerized accounting system, it can occur frequently and automatically.

Question 8

After transaction information has been recorded in the journal, it is transferred to the

Accepted Answer

After transaction information has been recorded in the journal, it is transferred to the ledger, which contains individual accounts for each asset, liability, equity, revenue, and expense. The ledger serves as the main source of information for preparing financial statements and is organized by account, allowing for easy analysis and review of financial data. Trial balance serves as a summary of all ledger account balances, while the income statement shows the revenue and expense transactions for a specific period. The book of original entry, also known as the journal, is where initial transaction information is recorded.

Question 9

At September 1, 2010, Crews Co. reported owner's equity of $136,000. During the month, Crews generated revenues of $20,000, incurred expenses of $12,000, purchased equipment for $5,000 and withdrew cash of $2,000. What is the amount of owner's equity at September 30, 2010?

Accepted Answer

Owner's equity increases by the net income (revenues - expenses) and decreases by withdrawals. Net income is $8,000 ($20,000 - $12,000). After accounting for the withdrawal of $2,000, the increase in equity is $6,000. Therefore, the owner's equity at September 30, 2010, is $142,000 ($136,000 + $6,000). The equipment purchase does not directly affect owner's equity.

Question 10

Evidence that would not help with determining the effects of a transaction on the accounts would be a(n)

Accepted Answer

An advertising brochure would not provide any evidence related to a transaction that would help in determining the effects on the accounts. The other options, such as a cash register sales tape, bill, and check, would all provide specific details related to a transaction that would help to determine its effects on the accounts.

Question 11

During 2010, its first year of operations, Yaspo's Bakery had revenues of $60,000 and expenses of $33,000. The business had owner drawings of $18,000. What is the amount of owner's equity at December 31, 2010?

Accepted Answer

The answer of During 2010, its first year of operations,...

Question 12

The first step in the recording process is to

Accepted Answer

The first step in the recording process is to analyze each transaction for its effect on the accounts. This is important to determine which accounts should be debited and credited, and ensures that the financial statements are accurate. The other options listed are not the first steps in the recording process.

Question 13

Another name for journal is

Accepted Answer

"Book of original entry" is another name for a journal, as it is where transactions are first recorded in chronological order. The other options may refer to different accounting books, but not specifically a journal.

Question 14

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

Accepted Answer

A simple entry involves only two accounts: one debit and one credit.

Question 15

On July 7, 2010, Anaya Enterprises performed cash services of $1,400. The entry to record this transaction would include

Accepted Answer

Anaya Enterprises performed a cash service which means they received cash, so the account that should be debited is Cash. Therefore, the correct answer is a debit to Cash of $1,400.

Question 16

In recording business transactions, evidence that an accounting transaction has taken place is obtained from

Accepted Answer

Business documents, such as receipts, invoices, and bank statements, provide evidence that an accounting transaction has taken place. The Internal Revenue Service, public relations department, and SEC may not necessarily provide evidence of accounting transactions.

Question 17

A compound journal entry involves

Accepted Answer

A compound journal entry involves three or more accounts. It is used to record multiple transactions that are related to each other and occur at the same time.

Question 18

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

Accepted Answer

The next step in the recording process is to transfer the information to ledger accounts. The ledger accounts show the balances of specific accounts and are used to prepare the company's financial statements. The information in the ledger accounts is also used to calculate the balances of owner's equity accounts. The company's bank is not involved in this step of the recording process.

Question 19

A journal provides

Accepted Answer

A journal is a chronological record of all transactions that have taken place in a business. It provides a detailed account of each transaction, including the date, amount, and accounts involved. It is used as a source document for recording transactions into the general ledger and also serves as a legal record of all business transactions.

Question 20

The final step in the recording process is to

Accepted Answer

The final step in the recording process is to transfer journal information to ledger accounts, which involves updating the individual accounts with the relevant transactions recorded in the journal. This ensures that all transactions are accurately recorded and organized in the proper accounts for easy reference and analysis. While analyzing each transaction, entering the transaction in a journal, and preparing a trial balance are all important steps in the recording process, they precede transferring journal information to ledger accounts and are not the final step.

Quiz 2: The Recording Process