Question 1

Journal entries are typically posted to the ledger only at the end of the year.

Accepted Answer

Journal entries are typically posted to the ledger after each transaction, not just at the end of the year. This allows for accurate and up-to-date financial records throughout the year.

Question 2

When a company records the purchase of 1 month of prepaid expense the transaction does not affect the totals of assets or liabilities and owner's equity.

Accepted Answer

Prepaid expenses are assets, and when a company records the purchase of 1 month of prepaid expense, the total assets increase. However, since the expense has not yet been incurred, the total liabilities and owner's equity remain unchanged.

Question 3

In a journal entry,debits are always indented.

Accepted Answer

In a journal entry, debits are not always indented; the format can vary, but typically, both debits and credits are aligned for clarity, without indentation distinguishing them.

Question 4

A trial balance is normally prepared at the end of each business day.

Accepted Answer

A trial balance is not normally prepared at the end of each business day, but rather at the end of an accounting period (such as a month or a year).

Question 5

In a trial balance,all debits are listed before all credits.

Accepted Answer

In a trial balance, debits and credits are listed side by side for each account, not sequentially with all debits first followed by all credits.

Question 6

A journal entry is a notation that consists of either a single debit or a single credit that is recorded in the general ledger.

Accepted Answer

A journal entry consists of both a debit and a credit (double-entry accounting). It is not just a single debit or credit.

Question 7

A transposition error will cause the trial balance to be out of balance by an amount that is evenly divisible by two.

Accepted Answer

A transposition error occurs when digits are switched, such as writing $945 as $954. The resulting error will not be evenly divisible by two and will cause the trial balance to be out of balance by an unequal amount.

Question 8

The journal is a chronological record of all transactions.

Accepted Answer

The journal is a chronological record of all transactions, including each transaction's date, accounts involved, and transaction amount. It serves as the first step in the accounting cycle and provides a complete record of all financial transactions that a business makes.

Question 9

In a journal entry,the Post.Ref.column is left blank until the entry has been posted.

Accepted Answer

The Post.Ref.column is left blank until the entry has been posted in order to avoid any confusion or errors in the accounting system. Once the journal entry has been posted, the Post.Ref. column is filled out with the reference number of the transaction for future reference and tracking purposes.

Question 10

One might see "J5" correctly placed in the Post.Ref.column of the journal.

Accepted Answer

Without any additional context, it is difficult to determine the specific meaning of "J5," but it is possible for it to be correctly placed in the Post.Ref.column of a journal.

Question 11

When the columns of the trial balance equal each other,it is still possible that errors may have occurred in recording and posting the transactions.

Accepted Answer

The trial balance simply ensures that the debits and credits of accounts are equal, but it does not guarantee the accuracy of the transactions recorded and posted. Errors such as omitting a transaction or posting it to the wrong account can still occur even if the trial balance columns balance.

Question 12

Liabilities are established with credits and eliminated with debits.

Accepted Answer

Liabilities have a credit balance, so to establish a liability, you would credit the account. To eliminate a liability, you would debit the account.

Question 13

Generally,before Accounts Receivable is debited,it is credited.

Accepted Answer

Accounts Receivable is debited when a sale is made on credit, increasing the balance, and credited when a payment is received, decreasing the balance.

Question 14

Proper journal form is a way of recording a transaction with the date,debit account,and debit amount shown on one line,and the credit account (indented)and credit amount shown on the next line.

Accepted Answer

This is a correct description of proper journal form.

Question 15

Once in a while,a transaction leaves an account with a balance that isn't "normal." When this occurs,the "abnormal" balance should be corrected to the "normal" balance before copying the balance into the trial balance.

Accepted Answer

The trial balance should reflect actual account balances, including any "abnormal" balances, as it is a tool for verifying the arithmetic accuracy of the ledger accounts, not for correcting them.

Question 16

A trial balance may be prepared at any point in time.

Accepted Answer

A trial balance may be prepared at any point in time, typically at the end of a financial reporting period to ensure that the total of all debit balances equals the total of all credit balances.

Question 17

It is never correct for a compound entry's debit totals and credit totals to be unequal.

Accepted Answer

The basic principle of accounting is that every transaction should have equal debits and credits, which ensures that the accounting equation remains in balance. Therefore, it is never correct for a compound entry's debit and credit totals to be unequal.

Question 18

Recording an account with a debit balance as a credit,or vice versa,will cause the trial balance to be out of balance by an amount that is evenly divisible by two.

Accepted Answer

This is true because recording an account with thewrong balance will affect two accounts - the account initially recorded incorrectly and the account that should have been recorded correctly. This will result in a difference of two accounts, which is evenly divisible by two.

Question 19

Entering transactions into the journal is called posting.

Accepted Answer

Entering transactions into the journal is called journalizing. Posting is the process of transferring the information from the journal to the ledger accounts.

Question 20

In a journal entry,debits are always recorded before credits.

Accepted Answer

Debits are always recorded before credits in a journal entry according to the double-entry accounting system.

Quiz 2: Analyzing and Recording Business Transactions