accounting test 3
journal
1. A form for recording transactions in chronological order. (p. 58)
true
1. Information in a journal includes the debit and credit parts of each transaction recorded in one place. (p. 59)
memorandum
10. A form on which a brief message is written to describe a transaction. (p. 61)
true
10. The source document used when supplies are ordered by telephone on account is a memorandum. (p. 66)
false
11. The source document used when supplies bought on account are paid for is a receipt. (p. 67)
true
12. When cash is received from sales, both the Cash account and the Sales account are increased. (p. 70)
true
13. The source document sales invoice is abbreviated as S in a journal entry. (p. 71)
false
14. When services are sold on account, an asset account and a liability account are affected. (p. 71)
true
15. The accounts affected when paying cash for equipment rental are Equipment Rental Expense and Cash. (p. 72)
true
16. When cash is received on account, one asset account increases and another asset account decreases. (p. 73)
false
17. The accounts affected when paying cash to the owner for a withdrawal of equity are the Capital Account and Cash. (p. 74)
false
18. If there is only one blank line remaining on a journal page, it is standard practice to split the entry and record the second line of the entry on the next page. (p. 76)
false
19. To correct an error in a journal, simply erase the incorrect item and write the correct item in the same place. (p. 78)
journalizing
2. Recording transactions in a journal. (p. 58)
true
2. The Objective Evidence accounting concept requires that there be proof that a transaction did occur. (p. 59)
true
20. If an error is detected in a journal entry after several additional journal entries have been made, the entry should be corrected by drawing a line through the incorrect parts and writing the correct parts on the same line above the error. (p. 78)
true
3. Examples of source documents include checks, sales invoices, receipts, and memorandums. (p. 59)
entry
3. Information for each transaction recorded in a journal. (p. 59)
false
4. A memorandum is the source document used when items are paid in cash. (p. 61)
double-entry account
4. The recording of debit and credit parts of a transaction. (p. 59)
source document
5. A business paper from which information is obtained for a journal entry. (p. 59)
true
5. A receipt is the source document for cash received from transactions other than sales. (p. 61)
check
6. A business form ordering a bank to pay cash from a bank account. (p. 60)
true
6. A calculator tape is the source document for daily cash sales. (p. 61)
invoice
7. A form describing the goods or services sold, the quantity, the price, and the terms of sale. (p. 60)
false
7. The accounts affected when cash is received from the owner as an investment are Cash and Sales. (p. 62)
sales invoice
8. An invoice used as a source document for recording a sale on account. (p. 60)
false
8. When cash is paid for supplies, the Cash account is debited. (p. 63)
receipt
9. A business form giving written acknowledgement for cash received. (p. 61)
true
9. When cash is used to pay for insurance, the asset account Prepaid Insurance increases. (p. 65)