Question 1

A numbering system for a chart of accounts

Accepted Answer

The numbering system for a chart of accounts usually starts with statement of financial position accounts, such as assets, liabilities, and equity. While there may be some commonality in account numbers across different businesses or industries, the specific numbering system is typically unique to each individual organization. There are no IFRS-prescribed or universally uniform numbering systems for charts of accounts.

Question 2

Which of the following statements is false concerning use of currency signs?

Accepted Answer

The answer of Which of the following statements is false...

Question 3

Customarily, a trial balance is prepared

Accepted Answer

A trial balance is prepared at the end of an accounting period, typically monthly, quarterly, or annually. It is used to ensure that the total debits and credits in the ledger match and to identify any errors in the accounting records. It is not prepared daily or only at the inception of the business.

Question 4

After journal entries are posted, the reference column

Accepted Answer

The reference column of the general ledger will show the page numbers of the journal entries that were posted to that account. This helps to track where the information for that account came from. The reference column of the general journal will also show page numbers, but this question specifically asks about after the entries are posted. The "Dr" or "Cr" notation in the general journal reference column is used to indicate the debit or credit side of the transaction for that account. The general ledger will show account numbers in the account column, but again, this question is asking specifically about the reference column.

Question 5

Posting

Accepted Answer

Posting involves transferring all the debits and credits from journal entries to the respective accounts in the ledger, ensuring each entry is fully posted before moving to the next.

Question 6

The explanation column of the general ledger

Accepted Answer

The answer of The explanation column of the general ledger
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Question 7

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

Accepted Answer

The chart of accounts is the foundation of a computerized accounting system. It is a list of all the accounts that will be used to record financial transactions and is important because it ensures consistency in the way financial data is recorded and organized. Once the chart of accounts is created, the general ledger, general journal, and trial balance can be set up based on the accounts in the chart of accounts.

Question 8

The steps in preparing a trial balance include all of the following except

Accepted Answer

The steps in preparing a trial balance include listing the account titles and their balances, totaling the debit and credit columns, and proving the equality of the two columns. The only step that is not included is transferring journal amounts to ledger accounts, as this is done prior to preparing the trial balance.

Question 9

A trial balance may balance even when each of the following occurs except when

Accepted Answer

The answer of A trial balance may balance even when...

Question 10

An account is an individual accounting record of increases and decreases in specific

Accepted Answer

An account is a record of increases and decreases in specific items of assets, liabilities, and equity.

Question 11

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

Accepted Answer

A list of accounts and their balances at a given time is called a trial balance. This document is typically used by accountants and bookkeepers to ensure that the total debits equal the total credits in the accounting system, and to identify any accounting errors or discrepancies that need to be addressed before year-end or financial reporting deadlines. A journal is a chronological record of all financial transactions, a posting is the act of transferring information from a journal to a ledger, and an income statement is a financial report that summarizes a company's revenues, expenses, and net income for a specific period of time.

Question 12

Which of the following rules is incorrect?

Accepted Answer

Debits increase the Shareholder's Equity account, which includes the Share Capital-Ordinary account, but not specifically the Share Capital-Ordinary account on its own.

Question 13

A trial balance is a listing of

Accepted Answer

A trial balance is a listing of all general ledger accounts and their balances. It is used to ensure that the total debits equal the total credits in the company's accounting system, providing an initial check for accuracy before preparing financial statements. Transactions are recorded in journals and then posted to the general ledger. The chart of accounts is a list of all accounts used by the company, but it does not include balances. The totals from the journal pages are not used to prepare a trial balance, although they may be used to create the general ledger entries.

Question 14

A debit is not the normal balance for which of the following?

Accepted Answer

The answer of A debit is not the normal balance...

Question 15

The trial balance

Accepted Answer

The answer of The trial balance
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Question 16

If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates

Accepted Answer

The sum of the debit column must always equal the sum of the credit column in a trial balance due to the fundamental accounting equation (assets = liabilities + equity). Therefore, a trial balance with equal debits and credits indicates the mathematical equality of the accounting equation. However, it does not guarantee that no errors have been made or that all accounts reflect correct balances. Errors may still exist if the wrong amounts were posted to the wrong accounts or if there are errors of omission.

Question 17

Under U.S.GAPP

Accepted Answer

The rules of debits and credits, and the steps in the recording process are generally consistent between U.S. GAAP and IFRS, although there are differences in other areas.

Question 18

Numerous errors may exist even though the trial balance columns agree.Which of the following is not one of these types of errors?

Accepted Answer

Transposition errors relate to the statement of financial performance, not the statement of financial position (i.e. the trial balance). The other options listed are examples of errors that may exist even if the trial balance columns agree.

Question 19

Which of the following statement is true regarding the recording process?

Accepted Answer

Both IFRS and U.S.GAAP use the same general rules of debits and credits and the steps in the recording process. Option A is incorrect because the double-entry accounting system is used by companies following both IFRS and U.S.GAAP. Option C is also incorrect because the organization of trial balance is the same for both IFRS and U.S.GAAP. Option D is not the best choice as options A and C are incorrect.

Question 20

A trial balance would only help in detecting which one of the following errors?

Accepted Answer

A trial balance compares the total of debit balances and credit balances in the ledger accounts. If there is a transposition error, the totals will not match and this error can be detected. However, a trial balance cannot detect errors like transactions that are not journalized or offsetting errors. A journal entry posted twice would also result in imbalanced ledger accounts, but this is not a unique error that can only be detected through a trial balance.

Quiz 2: The Recording Process