Question 1

If a journal entry is recorded twice, both entries must be reversed in order to correct the error.

Accepted Answer

To correct the error, only one of the duplicate entries needs to be reversed, not both.

Question 2

On the trial balance, which account balances should be listed in the debit column?

Accepted Answer

Assets, Dividends, and Expenses are typically listed in the debit column of a trial balance because they increase with a debit and decrease with a credit, following the rules of double-entry accounting.

Question 3

Where is the best place for a company's accountant to find the information necessary to review the activity in the cash account?

Accepted Answer

The general ledger is the primary accounting record used by accountants to track all financial transactions of a company, including the activity in the cash account, making it the best place to review such activities.

Question 4

The purpose of the trial balance is to verify that all account balances are correct.

Accepted Answer

The purpose of the trial balance is to verify that total debits equal total credits in the ledger, not to verify the accuracy of account balances.

Question 5

Once the trial balance is correct, the next step is to prepare the financial statements, beginning with the Income Statement.

Accepted Answer

The Income Statement is usually the first financial statement prepared after the trial balance has been corrected.

Question 6

A trial balance is a list of the accounts and their balances taken from the general journal.

Accepted Answer

A trial balance is a list of the accounts and their balances taken from the general ledger, not the general journal.

Question 7

A trial balance contains the name of the company, the words "trial balance" and the date of the statement.

Accepted Answer

A trial balance typically includes the name of the company, the title "trial balance," and the date of the statement to identify the document and the period it covers.

Question 8

An entry could have been posted twice and the trial balance might still balance.

Accepted Answer

The trial balance simply checks that the total debits equal the total credits in the ledger, and does not necessarily ensure that every entry is posted correctly. It is possible for an entry to be posted twice, resulting in an unbalanced ledger, but if the amounts are the same, the trial balance will still balance.

Question 9

On the trial balance, which account balances should be listed in the credit column?

Accepted Answer

Liabilities, Retained Earnings, and Revenues are accounts with normal credit balances and should be listed in the credit column of a trial balance. Assets, Dividends, and Expenses typically have debit balances.

Question 10

A trial balance will determine if:

Accepted Answer

A trial balance compares the total debits and total credits in the ledger accounts to ensure that they are equal, which confirms that the basic accounting equation (assets = liabilities + equity) is balanced. Therefore, it only determines whether debits equal credits and not the other options listed.

Question 11

Which document would be best to prove that the account balances are correct?

Accepted Answer

The answer of Which document would be best to prove...

Question 12

Motor Work, Inc.'s trial balance contains the following balances: Cash $367 Accounts Payable $268 Revenue $635
Accounts Receivable $430 Expenses $106
What is the amount of total debits for this trial balance?

Accepted Answer

The total debits in the trial balance are the sum of Cash ($367), Accounts Receivable ($430), and Expenses ($106), which equals $903.

Question 13

Coyote Co. paid $8,000 rent in advance. The journal entry would require:

Accepted Answer

When a company pays rent in advance, it records the payment as an asset called Prepaid Rent, not as an expense, because the benefit of the payment extends beyond the current period. Therefore, the correct entry is to debit Prepaid Rent and credit Cash.

Question 14

Monet Designs provided services to a client on account. The journal entry would require:

Accepted Answer

Monet Designs provided services on account, meaning they have not yet received cash but have earned revenue. The accounts affected are Accounts Receivable (an asset account that represents the amount owed to Monet Designs by the client) and Service Revenue (a revenue account that represents the company's earning for providing services). As Monet Designs has not yet received cash, there is no need to debit or credit the Cash account. Therefore, the correct journal entry would be a debit to Accounts Receivable (to increase the asset account) and a credit to Service Revenue (to increase the revenue account).

Question 15

If debits equal credits on the trial balance, it means that all the steps in the accounting process are correct.

Accepted Answer

While debits equaling credits on the trial balance indicates that the accounts are in balance, it does not guarantee that all transactions have been recorded correctly or in the right accounts. Errors or omissions can still occur.

Question 16

The required accounting period for a trial balance is one year.

Accepted Answer

The required accounting period for a trial balance can vary depending on the needs of the company, but it is typically a shorter period than one year, such as a month, quarter, or six months.

Question 17

The trial balance is an official financial statement.

Accepted Answer

The trial balance is not an official financial statement; it is an internal report used for checking the balance of debits and credits in the accounts, primarily for error-checking purposes.

Question 18

Revenues and expenses are listed in different columns on the trail balance.

Accepted Answer

Revenues and expenses are listed as separate categories and are typically recorded in different columns on the trial balance. The revenue column shows total income from sales or other business activities, while the expense column shows the total cost of goods sold, operating expenses, and other business expenses.

Question 19

Fischers, Inc. paid $1,200 of dividends. The journal entry would require:

Accepted Answer

When a company pays dividends, it reduces its cash balance (since it is paying cash out to its shareholders). Therefore, the entry would require a debit to Dividends (since it is an expense) and a credit to Cash (since it is an asset being reduced). Option A is the reverse of this entry and is incorrect. Option C involves accounts payable, which would not be relevant when paying dividends. Option D is also incorrect as it involves debiting accounts payable for payments made to shareholders, which is not accurate.

Question 20

Caesar's Company's trial balance contains the following balances: Cash $423 Accounts Receivable $380 Revenue $725
Accounts Payable $287 Expenses $209
What is the amount of total debits for this trial balance?

Accepted Answer

The total debits are calculated by adding Cash ($423), Accounts Receivable ($380), and Expenses ($209), which equals $1,012.

Quiz 2: Analyzing and Recording Business Transactions