Journalizing and Posting Transactions

Source documents provide the input for the accounting process.

True

Posting from the journal to the ledger does NOT involve which of the following steps?

Enter the description of the entry.

A complete set of all the accounts used by a business is known as the general ledger.

True

A separate line in the two-column journal should be used for each account title.

True

All transactions must be posted before preparing a trial balance.

True

An erasure may suggest that you are hiding something.

True

Copies of sales tickets or sales invoices issued to customers or clients provide information about sales of goods or services.

True

Each entry in the journal affects two or more accounts.

True

Firms are more likely to use a four-column general ledger account than T accounts.

True

Information about cash disbursements can be obtained from check stubs and carbon copies of checks.

True

No entries are made in the Posting Reference column in a two-column journal when journalizing.

True

The Description column of a two-column journal is used to enter the titles of the accounts affected by each transaction, together with a description of the transaction.

True

The chart of accounts includes the account titles in numerical order.

True

The flow of data through the accounting information system includes analyzing transactions, journalizing, posting, and preparing a trial balance.

True

The general ledger is kept to supply management with desired information in summary form.

True

The journal provides the information needed to transfer the debits and credits to the accounts in the ledger.

True

A list of all accounts (account titles) used by a business is called a(n) ___________ _____ ___________ .

chart of accounts

Journal entries requiring more than one debit and/or one credit are called ______________ _______________.

compound entries

For EVERY transaction, the accountant enters the

day.

The transaction to record payment for delivery equipment that was purchased on account in the previous month would include

debiting Accounts Payable and crediting Cash.

If the owner of a company invested cash in a business enterprise, the transaction would include

debiting Cash and crediting Capital.

Sales revenue received in cash is entered by

debiting Cash and crediting Sales Revenue.

When delivery equipment is purchased on account, the transaction to be entered by the purchaser includes

debiting Delivery Equipment and crediting Accounts Payable.

Cash is used to pay for a car for personal use by the owner. The transaction includes

debiting Drawing and crediting Cash.

If cash is paid for worker salaries, the transaction includes

debiting Salaries Expense and crediting Cash.

A chart of accounts does NOT include a. liabilities. b. names of suppliers. c. owner's equity. d. assets.

names of suppliers.

The accounts in the chart of accounts are arranged in

numerical order.

Copying the debits and credits from the journal to the ledger accounts is a process called ______________ .

posting

Source documents begin the process of entering transactions in the accounting system.

True

Source documents provide objective, verifiable evidence of business transactions.

True

The ledger is a reliable source of information only when all of the transactions entered in the journal have been posted.

True

The process of copying the debits and credits from the journal to the ledger accounts is known as posting.

True

The purpose of a journal is to provide a chronological record of all transactions completed by the business.

True

The purpose of a trial balance is to prove that the totals of the debit and credit balances in the ledger accounts are equal.

True

Receipt stubs, carbon copies of receipts, cash register tapes, or memos of cash register totals provide information about

cash receipts.

Corrections in accounts should be

corrected by preparing a correcting entry.

The payment of rent is journalized as a debit to Utilities Expense and a credit to Cash. This will require a _______________ _______________ .

correcting entry

When an incorrect entry has been journalized and posted to a wrong account or for the wrong amount, a(n) _____________ _____________ is required.

correcting entry

The payment of a utility bill (such as electricity) for the month would include

debiting Utilities Expense and crediting Cash.

The Item column in a general ledger is used to provide ___________________ for special entries.

descriptions

The steps in the journalizing process include all of the following EXCEPT a. enter the debit. b. enter the credit. c. enter the date. d. enter the balance.

enter the balance.

To find an error, you should do all of the following EXCEPT a. find the difference between debits and credits. b. retrace any math computations. c. erase questionable entries. d. double-check every entry.

erase questionable entries.

The Item column in the general ledger is used to describe special entries NOT including which of the following?

forwarding entries

Instead of T accounts, businesses are more likely to use a

four-column account.

If the difference between the debits and credits of a trial balance is divisible by nine, you may have committed a slide error or a(n) _________________ error.

transposition

When two digits in a debit or credit amount are reversed, a(n) ____________ _____________ has occurred.

transposition error

A(n) _______________ _______________ can be prepared daily, weekly, monthly, or whenever desired to prove the equality of the debits and credits in the ledger accounts.

trial balance

The journal entry to purchase equipment on account includes a:

credit to Accounts Payable.

The information in the Posting Reference columns of the journal and the ledger that provides a link between the journal and the ledger is known as a(n) _______________-______________.

cross-reference

The act of entering transactions in the journal is known as ____________.

journalizing

Corrections in accounts should be made by

preparing a correct entry.

Every entry in the journal should include all of the following EXCEPT a. the amounts. b. the balance of the accounts affected. c. a brief description. d. the title of each account affected.

the balance of the accounts affected.

The simplest form of journal is one with

two columns.

Almost any document that provides information about a business transaction is included in the chart of accounts.

False

An account in the chart of accounts is assigned a number at random.

False

Entering the account number in the Posting Reference column of the journal is the first step in the posting process.

False

Entering transactions in a journal is called posting.

False

In some cases, erasures are better for corrections than the ruling method.

False

It is permissible to enter information about a transaction in the ledger accounts first, before entering the information in the journal.

False

Purchase invoices received from suppliers provide information about cash payments.

False

The chart of accounts includes assets, liabilities, and owner's equity accounts only.

False

The main advantage of a two-column account is that it maintains a running balance.

False

The posting reference, amount, and description are the three items of information about each transaction that should be entered in the ledger accounts.

False

To make the posting process easier, posting reference entries are made at the same time that transactions are entered in the two-column journal.

False

Transactions which do not affect the cash account do not need to be entered in the journal, because they do not affect net income or loss.

False

When entering titles of accounts in the two-column journal, the account to be credited is entered first and the account to be debited is entered second.

False

When the trial balance indicates that the ledger is in balance, you can assume there are no errors in the ledger.

False

A list of all the accounts used by a business is called a trial balance.

False

A trial balance can only be accurately prepared on the last day of the accounting period after all transactions have been entered.

False

A two-column journal has only two amount columns—one for the amount of the entry and one for the running balance.

False

After posting journal information to the ledger accounts, a check mark should be entered in the Posting Reference column of the journal to indicate that the transaction item has been posted.

False

The month in the journal is recorded

as the first entry on a page.

The journal is commonly referred to as a(n) __________ ______ _________ _______________, because it is here that the first formal accounting record of a transaction is made.

book of original entry

Because the first formal accounting record of a transaction is made in a journal from source document information, a journal is commonly referred to as a(n)

book of original entry.

The Posting Reference column of the journal provides a cross-reference between the

journal and ledger.

A chronological record of financial transactions expressed as debits and credits to accounts is provided by the

journal.

Journalizing does NOT include a. crediting account(s) that are affected. b. entering the date. c. posting the debits and credits to the accounts. d. debiting account(s) that are affected.

posting the debits and credits to the accounts.

Purchase invoices received from suppliers provide information about

purchases of goods or services.

The flow of financial data through the accounting information system does NOT include: a. journalizing and posting transactions. b. receiving payment for all accounts receivable. c. preparing a trial balance. d. analyzing transactions.

receiving payment for all accounts receivable.

Copies of sales tickets or sales invoices issued to customers or clients provide information about

sales of goods or services.

A(n) _____________ _____________ occurs when debit or credit amounts move a digit or two to the left or right when entered.

slide error

Almost any document that provides information about a business transaction can be called a(n) ______________ ________________.

source document

Forms and papers that provide information about a business transaction are called

source documents.