Deck 4: Record-Keeping

Question 1

Which of the following accounts does NOT appear on a post-closing trial balance?

A) Prepayments
B) Wages expense
C) Accumulated depreciation
D) Retained profits

Answer 1

B

Question 2

The bank notifies the company of fees for the month already taken out of the company's bank account. The CR entry would be:

A) CR Accounts payable
B) CR Expenses payable
C) CR Cash
D) CR Bank charges

Answer 2

C

Question 3

Identify the correct classification for the following four ledger accounts in the chart of accounts:

A) 1 expense, 2 liability, 3 expense, 4 expense.
B) 1 asset, 2 liability, 3 expense, 4 expense.
C) 1 asset, 2 liability, 3 expense, 4 asset.
D) 1 asset, 2 liability, 3 liability, 4 revenue.

Answer 3

B

Question 4

The following are steps in the accounting cycle: What is the order that is normally followed?

A) 4, 7, 3, 6, 1, 9, 2, 8, 5
B) 4, 7, 3, 6, 8, 1, 9, 2, 5
C) 4, 7, 3, 6, 1, 9, 8, 2, 5
D) None of the above

Question 5

Brownlee Ltd is a newly established retail store selling plumbing hardware. Shown below are ledger accounts in T-account form, with entries made for the first three months of business. Which transaction represents a customer paying his/her account?

A) (5A)
B) (6A)
C) (7)
D) (8)

Question 6

Greening Ltd is a newly established business selling computer hardware. Shown below are ledger accounts in T-account form, with entries made for the first month of operations. Which transaction represents payment for an expense item?

A) (4)
B) (5)
C) (10)
D) (8)

Question 7

The journal entry for the receipt of cash from accounts receivable is:

A) DR Cash
CR Sales revenue
B) DR Accounts receivable
CR Sales revenue
C) DR Cash
CR Accounts receivable
D) DR Accounts receivable
CR Cash

Question 8

Identify the correct classification for the following four ledger accounts:

A) 1 expense, 2 expense, 3 asset, 4 expense.
B) 1 expense, 2 liability, 3 revenue, 4 liability.
C) 1 asset, 2 liability, 3 revenue, 4 liability.
D) 1 asset, 2 liability, 3 asset, 4 liability.

Question 9

On 30 June, Dawes Pty Ltd receives an account for TV advertising for the month of June. It is not due for payment until August. The transaction would be recorded as:

A) DR Accounts payable
CR Advertising expense
B) DR Advertising expense
CR Prepaid expenses
C) DR Prepaid expenses
CR Accounts payable
D) DR Advertising expense
CR Accounts payable

Question 10

The following accounts were taken from the trial balance: Net profit for the period is:

A) $10 000.
B) $11 000.
C) $12 000.
D) $12 500.

Question 11

Which of the following errors, each considered individually, would cause the trial balance totals to be unequal?

A) The same transaction was recorded more than once.
B) A payment of $64 for supplies was posted as a debit of $46 to Supplies and a credit of $46 to Cash.
C) A payment of $131 to a creditor was posted as a debit of $131 to Accounts payable and a debit of $131 to Accounts receivable.
D) Cash received from customers on account was posted as a debit of $240 to Cash and a credit of $240 to Accounts payable.

Question 12

A chart of accounts is:

A) a list of the significant and formal relationships and roles within a business organisation.
B) a list of all transactions in chronological order.
C) a list, in chronological order, of journal accounts used in an accounting system.
D) a list of the complete set of account titles and their related reference numbers.

Question 13

Which of the following is NOT an accounting transaction?

A) A payment is made to a telecommunications company.
B) The company is awarded a contract to build a bridge, with construction to commence in three months' time.
C) A creditor charges interest for late payment.
D) The payroll department pays an employee for holiday pay.

Question 14

Supplies purchased on account were incorrectly recorded as office equipment. The correcting entry would be:

A) DR Supplies
CR Office equipment
B) DR Accounts payable
CR Supplies
C) DR Office equipment
CR Supplies
D) DR Supplies
CR Accounts payable

Question 15

Greening Ltd is a newly established business selling computer hardware. Shown below are ledger accounts in T-account form, with entries made for the first month of operations. What does transaction (2) represent?

A) Purchase of inventory on credit
B) Purchase of inventory for cash
C) Sale of inventory on credit
D) Sale of inventory for cash

Question 16

Which of the following is an accounting transaction?

A) Send a purchase order for inventory to a supplier.
B) Pay a deposit on a service to be received in the next accounting period.
C) Hire a new staff member.
D) Sign a new contract.

Question 17

Brownlee Ltd is a newly established retail store selling plumbing hardware. Shown below are ledger accounts in T-account form, with entries made for the first three months of business. What do transactions (6A) and (6B) represent?

A) Sale of goods on credit and later collection of cash
B) Sale of goods on credit and for cash
C) Receipt of cash and purchase of inventory
D) Sale of goods for cash

Question 18

When a company orders goods for resale, what is the accounting entry?

A) DR Cash
CR Accounts payable
B) DR Purchases
CR Accounts payable
C) DR Inventory
CR Accounts payable
D) No accounting entry is required yet

Question 19

Which of the following is NOT a source document of a business enterprise?

A) Trial balance
B) Purchase order
C) Cash receipts listings
D) An invoice

Question 20

An invoice from a painter for work completed on the office was received. The payment is due next month. The journal entry is:

A) DR Accounts payable
CR Repairs and maintenance expense
B) DR Accounts payable
CR Prepaid expenses
C) DR Repairs and maintenance expense
CR Accounts payable
D) No entry is required at this stage

Question 21

Which of the following errors will be detectable by a trial balance?

A) A revenue incorrectly posted to the ledger as a liability
B) Failure to record a journal entry
C) A purchase of inventory posted twice to the general ledger
D) None of the above

Question 22

Which of the following accounts is not closed off at year-end?

A) Cost of goods sold
B) Depreciation expense
C) Sales revenue
D) Accounts receivable

Question 23

A trial balance would detect which of the following errors?

A) Failure to record depreciation for the year
B) A cash purchase of inventory recorded as a debit to Plant and a credit to Accounts payable
C) A salesman failing to record a cash sale, and retaining the proceeds
D) An addition error in a ledger account

Question 24

If the two totals of a trial balance are not equal, it could be due to:

A) failure to record a transaction.
B) recording the same erroneous amount for both the debit and the credit parts of a transaction.
C) an error in determining the account balances, such as an incorrectly computed balance.
D) a transaction was not posted.

Question 25

Which of the following statements about closing the accounts is NOT true?

A) Sales revenue account is debited.
B) Depreciation account is credited.
C) Share capital is debited.
D) A profit is credited to the retained profits account.

Question 26

Which of the following may cause the sum of the debit column of a trial balance to differ from the sum of the credit column?

A) Posting the same wrong amount to both sides of the right accounts
B) Posting an amount to the wrong side of the right account
C) Posting an amount to the right side of the wrong account
D) An asset recorded as an expense