The process of initially recording a business transaction is called

1) The process of initially recording business transactions in a journal is:

A) posting.

B) sliding.

C) journalizing.

D) transposing.

2) In the month of June, Davis Computers paid three months’ rent in advance. The journal entry to record this transaction is:

A) Rent Expense Cash

B) Cash Prepaid Rent

C) Cash Rent Expense

D) Prepaid Rent Cash

3) Antonio’s catered a reception. The total price was $1,200. The customer paid $200 cash and charged the remainder. The journal entry to record this transaction is:

A) Cash 200

Accounts Receivable 200

B) Cash 200

Accounts Receivable 1,000

Catering Service Fees 1,200

C) Cash 1,000

Accounts Receivable 200

Catering Service Fees 1,200

D) Accounts Receivable 1,200

Cash 200

Catering Service Fees 1,000

4) M. Sands, CPA, collected fees of $650 not previously billed or recorded. The journal entry to record the collection would be:

A) Accounting Fees 650

Cash 650

B) Accounts Receivable 650

Cash 650

C) Cash 650

Accounting Fees 650

D) Cash 650

M. Sands, Capital 650

5) When a number is recorded as 856 instead of 865 it is called a:

A) slide.

B) rearrangement.

C) composition

D) transposition.

6) A $600 check written for supplies was journalized as $60. The entry to correct this error is:

A) debit Supplies, $540; credit Cash, $540.

B) debit Supplies, $60; credit Cash, $60.

C) debit Cash, $540; credit Supplies, $540.

D) debit Cash, $60; credit Cash, $60.

7) Proof that the dollar amount of the debits equals the dollar amount of the credits in the ledger means:

A) all accounts have their correct balances in the ledger.

B) all of the information from the journal was correctly transferred to the ledger.

C) only that the debit dollar amounts equal the credit dollar amounts.

D) only the ledger is accurate; the journal may be incorrect. Final

8) A debit to a revenue account was posted to an asset account. This would cause:

A) revenue to be understated.

B) liabilities to be understated.

C) expense to be understated.

D) assets to be overstated.

9) The general journal entry to record an exchange of assets would most commonly include:

A) A debit to Cash and a credit to Fees Earned.

B) A debit to Fees Earned and a credit to Accounts Receivable.

C) A debit to Supplies and a credit to Accounts Payable.

D) A debit to Cash and a credit to Accounts Receivable.

10) If Cash has been debited, it is most likely that:

A) the business borrowed cash from the bank.

B) a charge customer made a payment.

C) the owner made an investment.

D) All of these are possible.

11) If you had purchased $500 of supplies during the month and at the end of the month you had $300 on hand, the adjustment for Supplies would be:

A) $100.

B) $300.

C) $200.

D) $500.

12) If the adjustment for Supplies used during the period was not made:

A) expenses would be too high.

B) revenue would be too high.

C) expenses would be too low.

D) asset Office Supplies would be too low.

13) Andrew Antiques showed store supplies available during the year of $400. A count of the supplies on hand as of May 31 is $150. The adjusting entry for Store Supplies would include:

A) a debit to Store Supplies for $150.

B) a credit to Store Supplies Expense for $250.

C) a debit to Store Supplies Expense for $250.

D) a credit to Store Supplies Expense for $150.

14) Roy purchased a one-year insurance policy for $2,400. The adjusting entry for one month would include a:

A) debit to Prepaid Insurance, $200.

B) credit to Cash, $200.

C) debit to Insurance Expense, $200.

D) None of these answers are correct.

15) The capital balance amount shown in the balance sheet column of the worksheet represents:

A) beginning capital plus net income.

B) beginning capital plus investments to capital.

C) beginning capital less withdrawals.

D) beginning capital plus net income less withdrawal.

16) When counting the supplies a file cabinet was forgotten and the adjustment was made based on the incorrect count. This would:

A) overstate the period’s net income.

B) overstate the end of period assets.

C) understate the end of period assets.

D) None of these are correct.

17) The adjustment for accrued wages included the entire pay period, some of which occurs next month. This would:

A) understate the end of period liabilities.

B) overstate the period’s net income.

C) overstate the end of period liabilities.

D) None of these are correct.

18) The purchase of equipment will require an adjustment of:

A) increasing the total assets and increasing the total expenses at the end of the month.

B) decreasing the total assets and decreasing the total expenses at the end of the month.

C) decreasing the total assets and increasing the total expenses at the end of the month.

D) none of the above.

19) Which of the following would cause an asset to be debited and a liability credited?

A) Recorded the adjustment for the expiration of the insurance policy

B) Recorded the adjustment for the expiration of rent

C) Purchased supplies on account

D) None of these would have that effect.

20) Which of the following would cause a liability to be credited and an expense debited?

A) Recorded the adjustment for the accrual of wages

B) It is the end of the month and no utility bill has been received

C) Recorded an accrued expense

D) All of the above would have that effect.

21) The adjusting entries are journalized:

A) whenever time permits.

B) before preparing financial reports.

C) before the next accounting period starts.

D) at the beginning of the accounting period.

22) Which of the following accounts would be considered a permanent account?

A) Service Fees

B) Salaries Expense

C) Salaries Payable

D) Depreciation Expense

23) An important purpose of closing entries is to:

A) set nominal account balances to zero to begin the next period.

B) adjust the accounts in the ledger.

C) help in preparing financial statement.

D) set real account balances to zero to begin the next period.

24) Which of the following accounts will not be closed to Income Summary at the end of the fiscal year?

A) Word Processing Fees

B) Smith, Withdrawals

C) Salaries Expense

D) Supplies Expense

25) Which of the following accounts will be directly closed to Capital at the end of the fiscal year?

A) Depreciation Expense

B) Fees Revenue

C) Salaries Expense

D) Withdrawals