Question 1

During February 2011, its first month of operations, the owner of Alona Enterprises invested cash of $50,000.Alona had cash revenues of $8,000 and paid expenses of $14,000.Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

Accepted Answer

A)  $6,000 credit
B)  $44,000 debit
C)  $58,000 debit
D)  $36,000 creditE) C) and D)
F) A) and D)

Question 2

The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the

Accepted Answer

A)  journal, and transfer the information to the ledger accounts.
B)  ledger, and transfer the information to the journal.
C)  book of accounts, and transfer the information to the journal.
D)  book of original entry, and transfer the information to the journal.E) B) and D)
F) A) and B)

Question 3

The general ledger contains all the accounts that are reported on the statement of financial position, whereas the general journal contains all the accounts that are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 4

The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

Accepted Answer

A) True 
 B)False

Question 5

The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for assets.

Accepted Answer

A) True 
 B)False

Question 6

The chart of accounts lists accounts and the account numbers that identify their location in the ledger starting with the accounts that are reported on the income statement.

Accepted Answer

A) True 
 B)False

Question 7

Revenues are

Accepted Answer

A)  Impacted by debits and credits in the same way that expenses are impacted by debits and credits.
B)  A subdivision of equity, providing information about why equity increased.
C)  Reported on the statement of financial position as a current item.
D)  All of the choices are correct regarding revenues.E) None of the above
F) B) and C)

Question 8

Martin's Mail Service purchased equipment for $3,000.Martin paid $500 in cash and signed a note for the balance.Martin debited the Equipment account, credited Cash and

Accepted Answer

A)  nothing further must be done.
B)  debited the retained earnings account for $2,500.
C)  credited another asset account for $500.
D)  credited a liability account for $2,500.E) None of the above
F) B) and D)

Question 9

Which of the following is false about a journal?

Accepted Answer

A)  It discloses in one place the complete effects of a transaction.
B)  It provides a chronological record of transactions.
C)  It helps to prevent or locate errors because debit and credit amounts for each entry can be readily compared.
D)  It keeps in one place all the information about changes in specific account balances.E) None of the above
F) C) and D)

Question 10

Currency signs are typically used only in the trial balance and the financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Which one of the following represents the expanded basic accounting equation?

Accepted Answer

A)  Assets = Liabilities + Share Capital-Ordinary account + Retained Earnings + Dividends - Revenue - Expenses.
B)  Assets + Dividends + Expenses = Liabilities + Share Capital - Ordinary + Retained Earnings + Revenues.
C)  Assets - Liabilities - Dividends Share Capital-Ordinary + Retained Earnings + Revenues - Expenses.
D)  Assets = Revenues + Expenses - Liabilities.E) B) and D)
F) B) and C)

Question 12

The primary purpose of a trial balance is to prove the mathematical equality of the debits and credits after posting.

Accepted Answer

A) True 
 B)False

Question 13

Under the double-entry system, revenues must always equal expenses.

Accepted Answer

A) True 
 B)False

Question 14

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 D)
F) A) and B)

Question 15

The first step in the recording process is to

Accepted Answer

A)  prepare financial statements.
B)  analyze each transaction for its effect on the accounts.
C)  post to a journal.
D)  prepare a trial balance.E) C) and D)
F) B) and C)

Question 16

The trial balance

Accepted Answer

A)  Is a listing of all the accounts and their balances in the order the accounts appear on the statement of financial position.
B)  Has as its primary purpose to prove (check)  that all journal entries were made for the period.
C)  Can be used to uncover errors in journalizing and posting.
D)  Is used to prepare the statement of financial position while the general ledger is used to prepare the income statement.E) C) and D)
F) A) and D)

Question 17

A numbering system for a chart of accounts

Accepted Answer

A)  is prescribed by IFRS.
B)  is uniform for all businesses.
C)  usually starts with income statement accounts.
D)  usually starts with statement of financial position accounts.E) C) and D)
F) A) and D)

Question 18

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

Accepted Answer

A) True 
 B)False

Question 19

Posting is the process of proving the equality of debits and credits in the trial balance.

Accepted Answer

A) True 
 B)False

Question 20

A compound journal entry involves

Accepted Answer

A)  two accounts.
B)  three accounts.
C)  three or more accounts.
D)  four or more accounts.E) All of the above
F) C) and D)

Exam 2: The Recording Process

The double-entry system of accounting refers to the placement of a double line at the end of a column of figures.

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The general ledger contains all the accounts that are reported on the statement of financial position, whereas the general journal contains all the accounts that are reported on the income statement.

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During February 2011, its first month of operations, the owner of Alona Enterprises invested cash of $50,000.Alona had cash revenues of $8,000 and paid expenses of $14,000.Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

Correct AnswerverifiedShow Answer

The chart of accounts lists accounts and the account numbers that identify their location in the ledger starting with the accounts that are reported on the income statement.

Correct AnswerverifiedShow Answer

Under the double-entry system, revenues must always equal expenses.

Correct AnswerverifiedShow Answer

The first step in the recording process is to

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The rules for debit and credit and the normal balance of Share Capital-Ordinary are the same as for assets.

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A numbering system for a chart of accounts

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Revenues are

Correct AnswerverifiedShow Answer

The primary purpose of a trial balance is to prove the mathematical equality of the debits and credits after posting.

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Currency signs are typically used only in the trial balance and the financial statements.

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Which of the following is false about a journal?

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The account titles used in journalizing transactions need not be identical to the account titles in the ledger.

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The trial balance

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Which one of the following represents the expanded basic accounting equation?

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The usual sequence of steps in the recording process is to analyze each transaction, enter the transaction in the

Correct AnswerverifiedShow Answer

Posting is the process of proving the equality of debits and credits in the trial balance.

Correct AnswerverifiedShow Answer

A compound journal entry involves

Correct AnswerverifiedShow Answer

The usual sequence of steps in the transaction recording process is:

Correct AnswerverifiedShow Answer

Martin's Mail Service purchased equipment for $3,000.Martin paid $500 in cash and signed a note for the balance.Martin debited the Equipment account, credited Cash and

Correct AnswerverifiedShow Answer

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