Questions and Answers
When transactions are entered in a general journal, in what order are they recorded?
Chronological order
What can you do if an error in a journal entry is discovered before posting?
Cross out and correct the journal entry
The amount debited to cash in a journal entry should be posted as a credit to what?
Owner's Equity
What is the General Ledger?
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What would be the journal entry to record the performance of services for cash?
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What does the General Ledger contain?
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What is the journal entry to record a bill for utilities paid in the next month?
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What entry should be made first in the general journal?
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What do posting references provide?
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How do you record the purchase of supplies for $750 on credit?
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How would you record an additional investment in cash of $10,000?
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If an owner wanted to see the debit and credit entry for a specific transaction, where would they look?
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In what order are General Ledger accounts usually arranged?
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What do compound entries affect?
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How would you journalize receiving $865 in cash on account from customers?
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What should the journal entry to record the sale of services on credit include?
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How do you journalize services performed for $1,350 on credit?
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How would you journalize returned damaged supplies with a cash refund of $60?
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How do you correct an entry for a check incorrectly recorded as a debit to Rent expense?
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What correcting entry is necessary if the Office Equipment account was incorrectly debited instead of the Shop Equipment account?
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Study Notes
General Journal and Ledger Entries
- Transactions are recorded in the general journal in chronological order, similar to a diary.
- If an error is found before posting to the ledger, cross out and correct the journal entry.
- Amounts debited to cash should be credited to Owner's Equity.
General Ledger Insights
- The General Ledger serves as the master reference for the accounting system, documenting all transaction activity in individual accounts.
- It contains all accounts necessary for preparing financial statements, arranged with balance sheet accounts first, followed by income statement accounts.
Journal Entries
- To record cash received for services performed: Debit Cash and Credit Income Fees.
- For a utility bill paid next month: Debit Utilities Expense and Credit Accounts Payable.
- First entry made in the general journal is accounts to be debited.
- To purchase supplies on credit for $750: Debit Supplies $750 and Credit Accounts Payable $750.
Investment and Cash Transactions
- If additional cash investment is made: Debit Cash $10,000 and Credit Capital $10,000.
- Cash received on account of $865: Debit Cash $865 and Credit Accounts Receivable $865.
- Sale of services on credit includes a debit to Accounts Receivable and credit to Revenue.
Adjustments and Corrections
- For performing services of $1,350 on credit: Debit Accounts Receivable and Credit Delivery Fee Income.
- Returned supplies with a cash refund of $60: Debit Cash and Credit Supplies.
- If a check for rent was wrongly recorded, the correct entry would be Debit Drawing Account and Credit Rent Expense.
- For correcting a transaction where office equipment was misclassified: Debit Office Equipment and Credit Utilities Expense.
Equipment Purchases
- Correcting entry for purchasing shop equipment mistakenly debited from Office Equipment: Debit Shop Equipment $4,500 and Credit Office Equipment $4,500.
Studying That Suits You
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Description
Test your knowledge on the key concepts from Accounting Connect Chapter 4 with these flashcards. Explore the importance of chronological order in journal entries and learn how to correct errors before posting to the ledger. Ideal for accounting students looking to reinforce their understanding of journal entries.
