Question 1

Revenues are a subdivision of retained earnings.

Accepted Answer

A) True 
 B)False

Question 2

When two accounts are required in one journal entry, the entry is referred to as a

Accepted Answer

A)  balanced entry.
B)  simple entry.
C)  posting.
D)  nominal entry.

Question 3

A credit to a liability account

Accepted Answer

A)  indicates an increase in the amount owed to creditors.
B)  indicates a decrease in the amount owed to creditors.
C)  is an error.
D)  must be accompanied by a debit to an asset account.

Question 4

The journal provides a chronological record of transactions.

Accepted Answer

A) True 
 B)False

Question 5

On July 7, 2011, Anaya Enterprises performed cash services of $1,400.The entry to record this transaction would include

Accepted Answer

A)  a debit to Service Revenue of $1,400.
B)  a credit to Accounts Receivable of $1,400.
C)  a debit to Cash of $1,400.
D)  a credit to Accounts Payable of $1,400.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

At October 1, 2011, Padilla Industries had an accounts payable balance of $30,000.During the month, the company made purchases on account of $25,000 and made payments on account of $40,000.At October 31, 2011, the accounts payable balance is

Accepted Answer

A)  $30,000.
B)  $10,000.
C)  $15,000.
D)  $40,000.

Question 8

Which of the following statements is true regarding debits and credits?

Accepted Answer

A)  On the income statement, debits are used to increase account balances, whereas on the statement of financial position, credits are used to increase account balances.
B)  The basic equation on the statement of financial position is Assets + Liabilities = Equity.
C)  The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for liabilities.
D)  On the income statement, revenues are increased by debits whereas on the statement of financial position retained earnings is increased by a credit.

Question 9

When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.

Accepted Answer

A) True 
 B)False

Question 10

Transactions are recorded in alphabetic order in a journal.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A)  journal.
B)  posting.
C)  trial balance.
D)  income statement.

Question 12

In recording business transactions, evidence that an accounting transaction has taken place is obtained from

Accepted Answer

A)  business documents.
B)  the taxing authority.
C)  the public relations department.
D)  the IASB.

Question 13

The right side of an account

Accepted Answer

A)  is the correct side.
B)  reflects all transactions for the accounting period.
C)  shows all the balances of the accounts in the system.
D)  is the credit side.

Question 14

The name given to entering transaction data in the journal is

Accepted Answer

A)  chronicling.
B)  listing.
C)  posting.
D)  journalizing.

Question 15

Which of the following statements is true?

Accepted Answer

A)  Debits increase assets and increase liabilities.
B)  Credits decrease assets and decrease liabilities.
C)  Credits decrease assets and increase liabilities.
D)  Debits decrease liabilities and decrease assets.

Question 16

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

Accepted Answer

A)  Because IFRS rely more on fair value and less on historical cost than U.S.GAAP the double-entry accounting system is not widely used by companies who use IFRS.
B)  Both IFRS and U.S.GAAP, use the same general rules of debits and credits and the steps in the recording process.
C)  A trial balance using IFRS is organised by first showing the accounts from the statement of financial position followed by accounts from the income statement; a trial balance using U.S.GAAP is organized using the opposite order.
D)  All of the choices are correct regarding the recording process.

Question 17

An account is a part of the financial information system and is described by all except which one of the following?

Accepted Answer

A)  An account has a debit and credit side.
B)  An account is a source document.
C)  An account may be part of a manual or a computerized accounting system.
D)  An account has a title.

Question 18

The chart of accounts is a listing of the accounts and the account numbers which identify their location in the ledger.

Accepted Answer

A) True 
 B)False

Question 19

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

Accepted Answer

A)  the company's bank.
B)  equity.
C)  ledger accounts.
D)  financial statements.

Question 20

Which of the following is the correct sequence of steps in the recording process?

Accepted Answer

A)  Posting, journalizing, analyzing
B)  Journalizing, analyzing, posting
C)  Analyzing, posting, journalizing
D)  Analyzing, journalizing, posting

Exam 2: The Recording Process

Transactions are recorded in alphabetic order in a journal.

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In recording business transactions, evidence that an accounting transaction has taken place is obtained from

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Which of the following statements is true?

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

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A credit to a liability account

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The right side of an account

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The name given to entering transaction data in the journal is

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When the volume of transactions is large, recording them in tabular form is more efficient than using journals and ledgers.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The chart of accounts is a listing of the accounts and the account numbers which identify their location in the ledger.

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At October 1, 2011, Padilla Industries had an accounts payable balance of $30,000.During the month, the company made purchases on account of $25,000 and made payments on account of $40,000.At October 31, 2011, the accounts payable balance is

Correct AnswerverifiedShow Answer

An account is a part of the financial information system and is described by all except which one of the following?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding debits and credits?

Correct AnswerverifiedShow Answer

Which of the following is the correct sequence of steps in the recording process?

Correct AnswerverifiedShow Answer

Revenues are a subdivision of retained earnings.

Correct AnswerverifiedShow Answer

After a business transaction has been analyzed and entered in the book of original entry, the next step in the recording process is to transfer the information to

Correct AnswerverifiedShow Answer

The journal provides a chronological record of transactions.

Correct AnswerverifiedShow Answer

On July 7, 2011, Anaya Enterprises performed cash services of $1,400.The entry to record this transaction would include

Correct AnswerverifiedShow Answer

When two accounts are required in one journal entry, the entry is referred to as a

Correct AnswerverifiedShow Answer

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