Question 1

In double entry bookkeeping, a trial balance is prepared. The expected result is ____.

Accepted Answer

The purpose of a trial balance in double entry bookkeeping is to ensure that the total of all debit balances equals the total of all credit balances, indicating that the ledger is mathematically correct.

Question 2

A computerized accounting system can ____.

Accepted Answer

A computerized accounting system can generate trial balances at any time, providing real-time financial data and insights.

Question 3

When a $10,000 loan is paid off, the balance in the Bank Loan liability account will be ____.

Accepted Answer

When a $10,000 loan is paid off, the balance in the Bank Loan liability account will be $0 because the liability has been settled in full.

Question 4

Helen's Home Collection business borrows $25,000. This amount should appear as a debit to the ____ account.

Accepted Answer

When a business borrows money, it receives cash, which increases the Cash account. Therefore, the Cash account should be debited to reflect the increase.

Question 5

A physician provides the same service to two patients with a charge of $80. One patient pays cash. The other patient has insurance coverage. Which is correct for a double entry system?

Accepted Answer

In a double entry system, providing a service would result in a credit to the Medical Services account, reflecting the increase in revenue. Since the service was provided to two patients, there would be two credit postings of $80 each to account for the revenue generated from both services.

Question 6

Manual accounting systems use records referred to as ____________________.

Accepted Answer

The answer of Manual accounting systems use records referred to...

Question 7

Helen's Home Collection business makes a payment on the loan. The payment of $1000 consists of $900 principal and $100 interest. The Cash account will be ____.

Accepted Answer

When a payment is made on a loan that includes both principal and interest, the total payment amount is deducted from the Cash account. In this case, the total payment is $1000, so the Cash account is reduced by $1000.

Question 8

Helen's Home Collection business receives a box of supplies that cost $168. The box came with a packing slip that correctly listed the contents. The packing slip was inadvertently discarded before the bookkeeper entered the transaction. Which of the following is true?

Accepted Answer

When a business receives supplies on account, it increases (debits) the supplies expense or inventory and increases (credits) accounts payable. Losing the packing slip does not affect the recording of the debit (increase in supplies expense or inventory), but it may lead to not recording the corresponding credit to accounts payable, hence the correct answer is that Accounts Payable will be missing a $168 credit.

Question 9

A computerized double entry accounting system will never allow the posting of a transaction in which the credits and debits do not _____________________.

Accepted Answer

The answer of A computerized double entry accounting system will...

Question 10

Helen's Home Collection business sends phlebotomists to patients' homes to collect blood samples. The business bought a car two years ago for $20,000. The car is an asset worth ____.

Accepted Answer

The car's value as an asset is its original cost minus accumulated depreciation over the two years.

Question 11

The widely used double entry accounting system was invented over 500 years ago.

Accepted Answer

The double entry accounting system was developed in the 15th century by Luca Pacioli, an Italian mathematician and Franciscan friar, making it over 500 years old.

Question 12

Dr. Ray performs a limited examination of a patient with XYZ healthcare insurance. Dr. Ray knows that XYZ will pay $65 for that service. Why does the accounting entry in the Medical Services account list the standard fee of $90?

Accepted Answer

The standard fee of $90 is listed to enable calculations of discounted fees, showing the full price before any insurance adjustments or discounts are applied. This practice helps in maintaining consistency in pricing and understanding the actual value of services provided before any discounts or insurance payments.

Question 13

In double entry accounting, interest paid on a loan is posted as a(n) ____________________.

Accepted Answer

The answer of In double entry accounting, interest paid on...

Question 14

Joe Teen has a simple business: he does odd jobs for his neighbors for $10 an hour. Joe hopes to become an accountant and would like to use a double-entry bookkeeping system for his business. What is the smallest number of accounts he needs to create?

Accepted Answer

In a double-entry bookkeeping system, each transaction affects at least two accounts (to maintain the accounting equation), so the minimum number of accounts Joe needs is two.

Question 15

A bookkeeper mistakenly posted a transaction to the Cash account and the Medical Services account. It was supposed to be posted to the Cash account and the Product Sales account. This error will be detected with a trial balance.

Accepted Answer

The total of all accounts with a credit balance will equal the total of all accounts with a debit balance, despite the error, because the Medical Services and the Product Sales accounts are both credit accounts.

Question 16

One task of a full-time accountant at a publicly held corporation is to prepare an annual audit of the corporation's financial records.

Accepted Answer

This task is performed by outside auditors.

Question 17

Bookkeeping transactions are completely automated in modern Practice Management Systems.

Accepted Answer

Such systems do not always know which account is appropriate for a transaction.

Question 18

The amount of money owed to a medical practice for a service provided today is entered as a credit in the ____________________ account.

Accepted Answer

The answer of The amount of money owed to a...

Question 19

Items such as prescription pads and printed patient questionnaires are capital assets.

Accepted Answer

Capital assets are long-term assets such as buildings, machinery, and equipment, not consumable supplies like prescription pads and printed patient questionnaires.

Question 20

The ultimate role of an accountant is to convert financial data into economic ____________________.

Accepted Answer

The answer of The ultimate role of an accountant is...

Quiz 4: Basic Accounting Concepts