Question 1

A new account is opened for each transaction entered into by a business firm.

Accepted Answer

A business firm can use the existing accounts for similar transactions instead of opening a new account for each transaction. This helps in simplifying the accounting process and avoiding clutter in the chart of accounts.

Question 2

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 3

The journal provides a chronological record of transactions.

Accepted Answer

The journal is used to record transactions in chronological order.

Question 4

A credit is not the normal balance for which account listed below?

Accepted Answer

Dividends account typically has a normal debit balance, not a credit balance.

Question 5

When a company distributes dividends,

Accepted Answer

Dividends can be distributed in forms other than cash, such as stock or other assets.

Question 6

At December 1, 2021, Cursive Company's accounts receivable balance was $1,800.During December, Cursive had revenues on account of $7,200 and collected accounts receivable of $6,000.At December 31, 2021, the accounts receivable balance is

Accepted Answer

To determine the accounts receivable balance at December 31, we need to add the new revenues on account to the beginning accounts receivable balance and then subtract the accounts receivable collected during December.

Beginning accounts receivable balance: $1,800
Add revenues on account: $7,200
Total accounts receivable to be collected: $9,000
Subtract collections during December: -$6,000

Accounts receivable balance at December 31: $3,000 debit

Question 7

A journal provides

Accepted Answer

A journal provides a chronological record of transactions.

Question 8

A three-column form of account is so named because it has columns for

Accepted Answer

A three-column form of account is named for its columns for debit, credit, and balance, allowing for the tracking of changes in account balances over time.

Question 9

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. A journal is a record of all financial transactions in chronological order, while posting is the process of transferring information from the journal to the ledger. An income statement is a financial statement that shows a company's revenues and expenses over a specified period of time.

Question 10

Which of the following is incorrect regarding a trial balance?

Accepted Answer

A trial balance only checks if the total debits match the total credits, it does not prove that all transactions have been recorded.

Question 11

Selected transactions for Good Home, a property management company, in its first month of business, are as follows:  Instructions
For each transaction indicate the following.
(a) The basic type of account debited and credited (asset (A), liability (L), stockholders' equity (SE)).
(b) The specific account debited and credited (cash, rent expense, service revenue, etc.).
(c) Whether the specific account is increased (incr.) or decreased (decr).
(d) The normal balance of the specific account.
Use the following format, in which the January 2 transaction is given as an example.

Accepted Answer

The answer of Selected transactions for Good Home, a property...

Question 12

The recording process becomes more efficient and informative if all transactions are recorded in one account.

Accepted Answer

Recording all transactions in one account may lead to confusion and make it harder to track the details of each transaction. It is usually more efficient to separate transactions into different accounts based on their purpose or category. This allows for more accurate and detailed record-keeping.

Question 13

All business transactions must be entered first in the general ledger.

Accepted Answer

Business transactions are first entered in the journals, and then they are posted to the general ledger.

Question 14

The ledger is merely a bookkeeping device and, therefore, does not provide useful data for management.

Accepted Answer

This statement is false. The ledger is an essential tool for tracking financial transactions, and it provides valuable data for management in terms of budgeting, forecasting, and financial analysis. The ledger helps management to make informed decisions about the company's financial health, profitability, and growth potential.

Question 15

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

Accepted Answer

The expanded basic accounting equation is Assets + Dividends + Expenses = Liabilities + Common Stock + Retained Earnings + Revenues. This equation takes into account the components of equity (common stock and retained earnings), as well as the impact of dividends, expenses, and revenues on the company's assets and liabilities.

Question 16

The Dividends account

Accepted Answer

The Dividends account is decreased with debits and increased with credits. It is a subdivision of retained earnings that represents the portion of profit that is distributed to shareholders. It does not appear on the income statement, as it is not an expense of the business. It only shows transactions when dividends are declared and paid out to shareholders.

Question 17

At October 1, 2021, Padilla Industries had an accounts payable balance of $40,000.During the month, the company made purchases on account of $33,000 and made payments on account of $48,000.At October 31, 2021, the accounts payable balance is

Accepted Answer

The accounts payable balance at the end of the month is calculated as the beginning balance plus purchases on account minus payments on account. Therefore, $40,000 + $33,000 - $48,000 = $25,000.

Question 18

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

Accepted Answer

A compound entry involves three or more accounts, whereas a simple entry involves only two accounts. A triple entry is not a recognized term in accounting, and a multiple entry could refer to any entry involving more than one account, including both simple and compound entries.

Question 19

On August 13, 2021, Swell Maps Enterprises purchased equipment for $1,300 and supplies of $200 on account.Which of the following journal entries is recorded correctly and in the standard format?

Accepted Answer

The answer of On August 13, 2021, Swell Maps Enterprises...

Question 20

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

Accepted Answer

The trial balance ensures that the total debits equal the total credits, reflecting the mathematical equality of the accounting equation (Assets = Liabilities + Equity), but it does not guarantee the absence of errors or the accuracy of account balances.

Quiz 2: The Recording Process