which of the following best describes a journal in accounting?
a) A book that records all the financial transactions of a business
b) A summary of the financial statements
c) A ledger used to calculate depreciation
d) A document used to record sales invoices
Answer: a) A book that records all the financial transactions of a business
Which of the following is the main purpose of a journal entry?
a) To summarize financial transactions
b) To calculate the balance sheet
c) To record business transactions in chronological order
d) To prepare the income statement
Answer: c) To record business transactions in chronological order
Which of the following transactions would require a journal entry?
a) Withdrawal of cash from the bank by the owner
b) Purchase of office supplies on credit
c) Payment of salaries to employees
d) All of the above
Answer: d) All of the above
What is the typical format of a journal entry?
a) Debit, credit, explanation
b) Credit, debit, explanation
c) Explanation, debit, credit
d) Explanation, credit, debit
Answer: a) Debit, credit, explanation
Which of the following is the correct journal entry to record a sale of goods on credit?
a) Debit Accounts Receivable, Credit Sales
b) Debit Sales, Credit Accounts Payable
c) Debit Accounts Payable, Credit Sales
d) Debit Sales, Credit Accounts Receivable
Answer: d) Debit Sales, Credit Accounts Receivable
What does the term “posting” refer to in accounting?
a) Transferring journal entries to the ledger accounts
b) Summarizing financial statements
c) Calculating depreciation
d) Preparing trial balances
Answer: a) Transferring journal entries to the ledger accounts
Which of the following is true regarding a general journal?
a) It is used to record only cash transactions.
b) It is a specialized journal for recording sales transactions.
c) It is a book of original entry for all types of transactions.
d) It is not commonly used in modern accounting systems.
Answer: c) It is a book of original entry for all types of transactions.
Which of the following statements is correct regarding journalizing?
a) It is the process of analyzing financial statements.
b) It is the process of recording transactions in the journal.
c) It is the process of preparing financial statements.
d) It is the process of calculating account balances.
Answer: b) It is the process of recording transactions in the journal.
Which of the following is an example of an adjusting journal entry?
a) Recording a cash payment for rent expense
b) Recognizing accrued salaries at the end of the accounting period
c) Recording a purchase of office supplies on credit
d) Paying off a long-term loan
Answer: b) Recognizing accrued salaries at the end of the accounting period
What is the purpose of a general ledger?
a) To record all financial transactions in chronological order
b) To summarize financial transactions by account
c) To calculate the net income of a business
d) To prepare the statement of cash flows
Answer: b) To summarize financial transactions by account
Which of the following accounts is typically found in the general journal?
a) Accounts Payable
b) Retained Earnings
c) Cash
d) Prepaid Expenses
Answer: c) Cash
Which of the following transactions would require a reversing entry in the journal?
a) Recording an accrual of interest expense
b) Recording a cash payment for rent
c) Recognizing unearned revenue
d) Paying off a long-term loan
Answer: a) Recording an accrual of interest expense
Which of the following is true about a compound journal entry?
a) It involves only two accounts.
b) It involves more than two accounts.
c) It is used for adjusting entries.
d) It is used to record cash transactions.
Answer: b) It involves more than two accounts.
Which of the following is an example of a correcting journal entry?
a) Recording a sales transaction
b) Adjusting for overstatement of inventory
c) Paying off a loan
d) Preparing a bank reconciliation
Answer: b) Adjusting for overstatement of inventory
What is the purpose of a cash receipts journal?
a) To record all cash payments made by the business
b) To record all cash received by the business
c) To record all credit sales made by the business
d) To record all credit purchases made by the business
Answer: b) To record all cash received by the business
Which of the following is the correct journal entry to record the purchase of equipment on credit?
a) Debit Accounts Receivable, Credit Equipment
b) Debit Equipment, Credit Accounts Payable
c) Debit Accounts Payable, Credit Equipment
d) Debit Equipment, Credit Accounts Receivable
Answer: c) Debit Accounts Payable, Credit Equipment
What is the purpose of a sales journal?
a) To record all sales returns and allowances
b) To record all credit sales made by the business
c) To record all cash received from sales
d) To record all purchases made by the business
Answer: b) To record all credit sales made by the business
Which of the following statements is true about a subsidiary journal?
a) It is a specialized journal for recording only cash transactions.
b) It is used to record all types of transactions in a summarized form.
c) It is a book of original entry for specific types of transactions.
d) It is not commonly used in manual accounting systems.
Answer: c) It is a book of original entry for specific types of transactions
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Which of the following is an example of a journal entry for depreciation expense?
a) Debit Depreciation Expense, Credit Accumulated Depreciation
b) Debit Accumulated Depreciation, Credit Depreciation Expense
c) Debit Equipment, Credit Accumulated Depreciation
d) Debit Accumulated Depreciation, Credit Equipment
Answer: a) Debit Depreciation Expense, Credit Accumulated Depreciation
What is the purpose of a purchases journal?
a) To record all sales returns and allowances
b) To record all credit purchases made by the business
c) To record all cash payments made by the business
d) To record all cash received from sales
Answer: b) To record all credit purchases made by the business
Which of the following accounts is commonly found in the sales journal?
a) Accounts Payable
b) Sales Revenue
c) Prepaid Expenses
d) Retained Earnings
Answer: b) Sales Revenue
Which of the following transactions would require a reversing entry in the journal?
a) Recording a cash receipt from a customer
b) Recognizing accrued revenue
c) Paying off accounts payable
d) Recording a purchase of inventory on credit
Answer: b) Recognizing accrued revenue
What is the purpose of a general journal in accounting?
a) To record transactions related to a specific customer
b) To record adjusting entries at the end of an accounting period
c) To record cash receipts and cash payments
d) To record all types of transactions not recorded in specialized journals
Answer: d) To record all types of transactions not recorded in specialized journals
Which of the following is an example of a compound journal entry?
a) Recording a cash payment for rent expense
b) Recognizing accrued salaries at the end of the accounting period
c) Paying off a long-term loan
d) Selling inventory for cash and recognizing the related cost of goods sold
Answer: d) Selling inventory for cash and recognizing the related cost of goods sold
What is the purpose of a cash disbursements journal?
a) To record all cash received by the business
b) To record all cash payments made by the business
c) To record all credit sales made by the business
d) To record all credit purchases made by the business
Answer: b) To record all cash payments made by the business
Which of the following is the correct journal entry to record the payment of accounts payable?
a) Debit Accounts Payable, Credit Cash
b) Debit Cash, Credit Accounts Payable
c) Debit Accounts Receivable, Credit Cash
d) Debit Cash, Credit Accounts Receivable
Answer: b) Debit Cash, Credit Accounts Payable
What is the purpose of a cash receipts journal in accounting?
a) To record all sales returns and allowances
b) To record all credit sales made by the business
c) To record all cash received from sales
d) To record all purchases made by the business
Answer: c) To record all cash received from sales
Which of the following statements is true about a subsidiary ledger?
a) It is used to record all types of transactions in a summarized form.
b) It is a book of original entry for specific types of transactions.
c) It is a specialized journal for recording only cash transactions.
d) It is not commonly used in manual accounting systems.
Answer: a) It is used to record all types of transactions in a summarized form.
Which of the following is an example of a journal entry for the recognition of prepaid expenses?
a) Debit Prepaid Expenses, Credit Accounts Payable
b) Debit Accounts Payable, Credit Prepaid Expenses
c) Debit Prepaid Expenses, Credit Cash
d) Debit Cash, Credit Prepaid Expenses
Answer: a) Debit Prepaid Expenses, Credit Accounts Payable