The Recording Process

The trial balance of Clooney Company had accounts with the following normal balances: Cash $5,000, Revenue $85,000, Salaries and Wages Payable $4,000, Salaries and Wages Expense $40,000, Rent Expense $10,000, Common Stock $42,000; Dividends $15,000; Equipment $61,000. In preparing a trial balance, the total in the debit column is A. $131,000. B. $216,000. C. $91,000. D. $116,000.

A. $131,000.

Which of the following statements about a journal is false? A. It is not a book of original entry. B. It provides a chronological record of transactions. C. It helps to locate errors because the debit and credit amounts for each entry can be easily compared. D. It discloses in one place the complete effect of a transaction.

A. It is not a book of original entry.

Companies prepare a trial balance at the end of an accounting period and it is useful in preparing financial statements. A. True B. False

A. True

Dollar signs do not appear in journal or ledgers. A. True B. False

A. True

The normal balance of an account is on the side where a decrease in the account is recorded. A. True B. False

B. False

An entry that requires more than two accounts is a compound entry. A. True B. False

A. True

Companies initially record transactions in the general journal in chronological order. A. True B. False

A. True

The entire group of accounts maintained by a company is the ledger. A. True B. False

A. True

When a company earns revenues, stockholders' equity increases. A. True B. False

A. True

A credit to a revenue account A. indicates an increase in revenues earned. B. indicates a decrease in revenues earned. C. must be accompanied by a debit to an expense account. D. is an error.

A. indicates an increase in revenues earned.

A trial balance A. is a list of accounts with their balances at a given time. B. proves the mathematical accuracy of journalized transactions. C. will not balance if a correct journal entry is posted twice. D. proves that all transactions have been recorded.

A. is a list of accounts with their balances at a given time.

All of statements about the trial balance are correct except A. the trial balance proves that all transactions have been recorded. B. the trial balance proves that the debits equal the credits after posting. C. the trial balance uncovers errors in journalizing and post D. the trial balance will still balance if postings are made to incorrect accounts.

A. the trial balance proves that all transactions have been recorded.

The debit and the credit columns of a trial balance each total $80,000. Which error may still exist? A. A journal entry contains a correct debit amount and an incorrect credit amount. B. A debit entry to the Cash account in the journal is incorrectly posted as a credit to the Cash account in the ledger. C. The credit portion of a journal entry is posted to the ledger twice. D. A cash payment on account of $450 is incorrectly recorded as a cash payment on account of $540.

D. A cash payment on account of $450 is incorrectly recorded as a cash payment on account of $540.

Which of the following is false about a journal? 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 easily compared. D. It keeps in one place all the information about changes in specific account balances.

D. It keeps in one place all the information about changes in specific account balances

The Dividends account decreases stockholders' equity and is an income statement account like expenses. A. True B. False

B. False

The first step in the recording process is to enter the transaction information in a journal. A. True B. False

B. False

Transferring journal entries to the ledger accounts is called journalizing. A. True B. False

B. False

Dollar signs are typically used only in the A. journals. B. ledgers. C. financial statements. D. financial statements and trial balance.

D. financial statements and trial balance.

A revenue account A. is increased by debits. B. is decreased by credits. C. has a normal balance of a debit. D. is increased by credits.

D. is increased by credits.

Posting A. normally occurs before journalizing. B. transfers ledger transaction data to the journal. C. is an optional step in the recording process. D. transfers journal entries to ledger accounts.

D. transfers journal entries to ledger accounts.

A list of accounts and their balances at a given point in time is called a A. chart of accounts. B. general journal. C. general ledger. D. trial balance.

D. trial balance.

The trial balance of Kelso Company had accounts with the following normal balances: Cash, $8,000; Accounts Receivable, $6,000; Equipment, $10,000; Accounts Payable, $9,000; Common Stock, $15,000; Dividends, $500; Service Revenue, $7,000; Rent Expense, $1,000; Salaries and Wages Expense, $3,000; and Advertising Expense, $2,500. In preparing the trial balance, the total in the debit column is A. $40,000. B. $31,000. C. $31,500. D. $39,000.

B. $31,000.

Which of the following statements about an account is true? A. In its simplest form, an account consists of two parts. B. An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items. C. There are separate accounts for specific assets and liabilities but only one account for owner's equity items. D. The left side of an account is the credit or decrease side.

B. An account is an individual accounting record of increases and decreases in specific asset, liability, and owner's equity items.

The first step in the recording process is to A. enter the transaction information in a journal. B. transfer journal information to appropriate ledger accounts. C. prepare the trial balance. D. analyze each transaction.

D. analyze each transaction.

Which of the following is incorrect regarding a trial balance? A. It proves that the debits equal the credits after posting. B. It proves that the company has recorded all transactions. C. A trial balance uncovers errors in journalizing and posting. D. A trial balance is useful in the preparation of financial statements.

B. It proves that the company has recorded all transactions.

The order of the accounts in the ledger is A. assets, revenues, expenses, liabilities, common stock, dividends. B. assets, liabilities, common stock, dividends, revenues, expenses. C. common stock, assets, revenues, expenses, liabilities, dividends. D. revenues, assets, expenses, liabilities, common stock, dividends.

B. assets, liabilities, common stock, dividends, revenues, expenses.

Entering transaction data in the journal is known as A. posting. B. journalizing. C. balancing. D. recording.

B. journalizing.

The Unearned Service Revenue account is a(n) A. asset. B. liability. C. revenue. D. expense.

B. liability.

Which of the following is not part of the recording process? A. analyzing transactions. B. preparing a trial balance. C. entering transactions in a journal. D. posting transactions.

B. preparing a trial balance.

The primary purpose of a trial balance is to A. prove that all transactions have been recorded. B. prove that the debits equal the credits after posting. C. uncover errors in journalizing and posting. D. determine the net income for the year.

B. prove that the debits equal the credits after posting.

Before posting a payment of $5,000, the Accounts Payable of Senator Company has a normal balance of $16,000. The balance after posting this transaction was A. $21,000. B. $5,000. C. $11,000. D. cannot be determined.

C. $11,000.

The Cash account had a normal balance of $48,000 at the beginning of the month. During the month, Langdon Company received cash payments from its customers of $22,000 and made cash payments of $8,000 for expenses incurred and $6,000 on account. The balance in the Cash account after posting these transactions is A. $12,000 debit balance. B. $84,000 credit balance. C. $56,000 debit balance. D. $56,000 credit balance.

C. $56,000 debit balance.

A trial balance will not balance if A. a correct journal entry is posted twice. B. the purchase of supplies on account is debited to Supplies and credited to Cash. C. a $100 cash drawing by the owner is debited to Dividends for $1,000 and credited to Cash for $100. D. a $450 payment on account is debited to Accounts Payable for $45 and credited to Cash for $45.

C. a $100 cash drawing by the owner is debited to Dividends for $1,000 and credited to Cash for $100.

The purchase of supplies on account should result in A. a debit to Supplies Expense and a credit to Cash. B. a debit to Supplies Expense and a credit to Accounts Payable. C. a debit to Supplies and a credit to Accounts Payable. D. a debit to Supplies and a credit to Accounts Receivable.

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

Posting of journal entries should be performed in A. account number order. B. alphabetical order. C. chronological order. D. dollar amount order.

C. chronological order.

Debits A. increase both assets and liabilities. B. decrease both assets and liabilities. C. increase assets and decrease liabilities. D. decrease assets and increase liabilities.

C. increase assets and decrease liabilities.

A credit to a liability account indicates a(n) A. debit was made to an asset account. B. decrease in the liability. C. increase in the liability. D. error.

C. increase in the liability.

A ledger A. contains only asset and liability accounts. B. should show accounts in alphabetical order. C. is a collection of the entire group of accounts maintained by a company. D. is a book of original entry.

C. is a collection of the entire group of accounts maintained by a company.

A complete journal entry includes all of the following except A. the date of the transaction. B. a brief explanation of the transaction. C. the balance of the accounts in the entry. D. the accounts and amounts to be debited and credited.

C. the balance of the accounts in the entry.

An account will have a debit balance if the A. number of debits exceeds the number of credits. B. first transaction posted was a debit. C. total of the debit amounts exceeds the credits. D. last transaction posted was a debit.

C. total of the debit amounts exceeds the credits.

The expanded accounting equation is A. Assets + Liabilities = Common Stock + Dividends + Revenues + Expenses B. Assets = Liabilities + Common Stock + Dividends + Revenues - Expenses C. Assets = Liabilities - Common Stock - Dividends - Revenues - Expenses D. Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses

D. Assets = Liabilities + Common Stock - Dividends + Revenues - Expenses

Which of the following statements is false? A. Revenues increase stockholders' equity. B. Revenues have normal credit balances. C. Credits to revenue accounts should exceed debits. D. Revenues are increased by debits.

D. Revenues are increased by debits.

Accounts that normally have debit balances are A. assets, expenses, and revenues. B. assets, expenses, and common stock. C. assets, liabilities, and dividends. D. assets, dividends, and expenses.

D. assets, dividends, and expenses.

A debit is not the normal balance for which of the following? A. asset account. B. dividends account. C. expense account. D. common stock account.

D. common stock account.