Question 1

The drawings account is a subdivision of the owner's capital account and appears as an expense on the income statement.

Accepted Answer

A) True 
 B)False

Question 2

The accounting cycle is a series of steps followed by accountants in preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 3

In recording an accounting transaction in a double-entry system,

Accepted Answer

A)   the number of debit accounts must equal the number of credit accounts.
B)   there must always be entries made on both sides of the accounting equation.
C)   the amount of the debits must equal the amount of the credits.
D)   there must only be two accounts affected by any transaction.E) None of the above
F) B) and D)

Question 4

Transactions are recorded in alphabetical order in a journal.

Accepted Answer

A) True 
 B)False

Question 5

An account consists of

Accepted Answer

A)   a title, a debit balance, and a credit balance.
B)   a title, a left side, and a debit balance.
C)   a title, a debit side, and a credit side.
D)   a title, a right side, and a debit balance.E) A) and C)
F) B) and D)

Question 6

The usual sequence of steps in the recording process is to

Accepted Answer

A)   analyze each transaction, enter the transaction in the journal, and transfer the information to the ledger accounts.
B)   analyze each transaction, enter the transaction in the ledger, and transfer the information to the journal.
C)   analyze each transaction, enter the transaction in the book of accounts, and transfer the information to the journal.
D)   analyze each transaction, enter the transaction in the book of original entry, and transfer the information to the journal.E) A) and B)
F) None of the above

Question 7

Posting is the transfer of journal entries to the ledger accounts.

Accepted Answer

A) True 
 B)False

Question 8

Frank's Sports Adventures has hired a new accountant. When she reviewed the financial statements for the previous year, she found a significant error which would mean that the statements were wrong. She should NOT

Accepted Answer

A)   create a new account called "Suspense" and use it to correct the error.
B)   notify the Management of the company immediately of the problem.
C)   research the journal entries to try and find the error.
D)   review all of the transactions for the past year for reasonableness.E) B) and D)
F) C) and D)

Question 9

A trial balance would help in detecting which one of the following errors?

Accepted Answer

A)   a transaction that is not journalized
B)   a journal entry that is posted twice
C)   offsetting errors made in recording the transaction
D)   a transposition error when transferring the debit side of a journal entry to the ledgerE) A) and D)
F) A) and C)

Question 10

Sebastian Piel is the accountant for the Canadian Athletic Association. He has just prepared the company's trial balance and discovered that the total debits are $9,257 and total credits are $9,230. Sebastian has likely made which of the following errors?

Accepted Answer

A)   Posted the journal entries to the wrong accounts.
B)   Posted a debit as a credit.
C)   Transposed two numbers during posting.
D)   Forgotten to make a journal entry.E) None of the above
F) C) and D)

Question 11

When an owner makes a withdrawal

Accepted Answer

A)   it doesn't have to be cash, it could be another asset.
B)   the drawings account will be increased with a credit.
C)   the capital account will be directly increased with a debit.
D)   the drawings account will be decreased with a debit.E) A) and D)
F) All of the above

Question 12

The usual sequence of steps in the transaction recording process is

Accepted Answer

A)   journal  →\rightarrow→  analyze  →\rightarrow→  ledger.
B)   analyze  →\rightarrow→  journal  →\rightarrow→  ledger.
C)   journal  →\rightarrow→  ledger  →\rightarrow→  analyze.
D)   ledger  →\rightarrow→  journal  →\rightarrow→  analyze. E) B) and C)
F) A) and C)

Question 13

Management could determine the amounts owing to suppliers by examining which ledger account?

Accepted Answer

A)   Supplies
B)   Cash
C)   Accounts Payable
D)   Supplies expenseE) A) and D)
F) A) and C)

Question 14

Which of the following is a correct numbering system to identify accounts within the chart of accounts?

Accepted Answer

A)   101-Cash; 201-Accounts Payable; 301-K. Clarke; Capital; 401-Consulting Revenue
B)   101-K. Clarke, Capital; 201-Consulting Revenue; 301-Cash; 401-Accounts Payable
C)   101-Cash; 201-Consulting Revenue; 301-Accounts Payable; 401-K. Clarke, Capital
D)   101-Accounts Payable; 201-K. Clarke, Capital; 301-Consulting Revenue; 401-CashE) C) and D)
F) B) and C)

Question 15

A transposition error involves the reversing of numbers in the posting process.

Accepted Answer

A) True 
 B)False

Question 16

A numbering system for a chart of accounts

Accepted Answer

A)   is prescribed by GAAP.
B)   is uniform for all businesses.
C)   usually starts with income statement accounts.
D)   usually starts with balance sheet accounts.E) None of the above
F) All of the above

Question 17

The first step in designing an accounting system is the creation of the

Accepted Answer

A)   general ledger.
B)   general journal.
C)   trial balance.
D)   chart of accounts.E) All of the above
F) A) and C)

Question 18

A transaction must be analyzed to determine which accounts it will effect.

Accepted Answer

A) True 
 B)False

Question 19

The right side of an account

Accepted Answer

A)   is the date.
B)   reflects all transactions for the accounting period.
C)   is the debit side.
D)   is the credit side.E) B) and D)
F) B) and C)

Question 20

To increase a liability account, the account is

Accepted Answer

A)   debited.
B)   credited.
C)   posted.
D)   journalized.E) A) and C)
F) None of the above

Exam 2: The Recording Process

A transposition error involves the reversing of numbers in the posting process.

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An account consists of

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Posting is the transfer of journal entries to the ledger accounts.

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The right side of an account

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Transactions are recorded in alphabetical order in a journal.

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A trial balance would help in detecting which one of the following errors?

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The drawings account is a subdivision of the owner's capital account and appears as an expense on the income statement.

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Management could determine the amounts owing to suppliers by examining which ledger account?

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The first step in designing an accounting system is the creation of the

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The accounting cycle is a series of steps followed by accountants in preparing financial statements.

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When an owner makes a withdrawal

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To increase a liability account, the account is

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In recording an accounting transaction in a double-entry system,

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Frank's Sports Adventures has hired a new accountant. When she reviewed the financial statements for the previous year, she found a significant error which would mean that the statements were wrong. She should NOT

Correct AnswerverifiedShow Answer

The usual sequence of steps in the transaction recording process is

Correct AnswerverifiedShow Answer

Sebastian Piel is the accountant for the Canadian Athletic Association. He has just prepared the company's trial balance and discovered that the total debits are $9,257 and total credits are $9,230. Sebastian has likely made which of the following errors?

Correct AnswerverifiedShow Answer

The usual sequence of steps in the recording process is to

Correct AnswerverifiedShow Answer

A transaction must be analyzed to determine which accounts it will effect.

Correct AnswerverifiedShow Answer

Which of the following is a correct numbering system to identify accounts within the chart of accounts?

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A numbering system for a chart of accounts

Correct AnswerverifiedShow Answer

Correct Answer
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