Accounting Transactions Quiz

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Questions and Answers

What is an accounting transaction?

An internal event within a company
A recording of a company's financial performance
A payment made to a supplier
An exchange of something of value between two or more external entities (correct)

What is the normal balance of an asset account?

Credit
Neither debit nor credit
Debit (correct)
Either debit or credit

What is the purpose of the chart of accounts?

To analyze financial performance
To organize and classify accounts (correct)
To prepare financial statements
To record transactions

What is the rule in the double-entry system?

Total debits must equal total credits (A) Signup and view all the answers

What happens to the owner's equity when the owner makes a drawing?

It decreases with a debit (B) Signup and view all the answers

What is the purpose of an account in an accounting system?

To record increases and decreases in specific asset, liability, and equity items (A) Signup and view all the answers

What is the normal balance of a revenue account?

Credit (B) Signup and view all the answers

What is the primary purpose of a chart of accounts?

To group related accounts together (D) Signup and view all the answers

What is the first step in the recording process?

Identify transactions from source documents (C) Signup and view all the answers

What is the main advantage of using a journal?

It helps to prevent errors in recording transactions (B) Signup and view all the answers

What is the purpose of posting journal information to the ledger?

To transfer transaction information to the ledger (A) Signup and view all the answers

What is the general journal?

A basic journal used by every business (D) Signup and view all the answers

What is the purpose of preparing a trial balance?

To prove the mathematical equality of debits and credits after posting (B) Signup and view all the answers

What type of error will the trial balance detect?

Posting wrong amount to an account (B) Signup and view all the answers

What is the first step in preparing a trial balance?

List account numbers, titles and balances (C) Signup and view all the answers

What is the result of a transposition error in the trial balance?

A difference between totals that is divisible by 9 (C) Signup and view all the answers

What is the purpose of checking the account balances in the ledger with the trial balance?

To verify the account balances in the ledger (B) Signup and view all the answers

What is the last step in preparing a trial balance?

Verify equality of debit and credit columns (D) Signup and view all the answers

What is the purpose of posting in the accounting process?

To transfer journal entries to ledger accounts (A) Signup and view all the answers

In the journal entry dated Oct 1, 2015, what amount did the Owner invest in the business?

$15000 (D) Signup and view all the answers

What is contained in the general ledger?

All asset, liability, equity, revenue, and expense accounts (C) Signup and view all the answers

What is recorded in the accounts affected column in the journal?

Debits and credits (B) Signup and view all the answers

What steps are involved in the process of posting?

Enter date in account to be debited and amount to be credited (A) Signup and view all the answers

Flashcards

Accounting Transaction

An exchange of something of value between two or more external entities

Normal Balance of Asset Account

Debit