23 Questions
What is an accounting transaction?
An exchange of something of value between two or more external entities
What is the normal balance of an asset account?
Debit
What is the purpose of the chart of accounts?
To organize and classify accounts
What is the rule in the double-entry system?
Total debits must equal total credits
What happens to the owner's equity when the owner makes a drawing?
It decreases with a debit
What is the purpose of an account in an accounting system?
To record increases and decreases in specific asset, liability, and equity items
What is the normal balance of a revenue account?
Credit
What is the primary purpose of a chart of accounts?
To group related accounts together
What is the first step in the recording process?
Identify transactions from source documents
What is the main advantage of using a journal?
It helps to prevent errors in recording transactions
What is the purpose of posting journal information to the ledger?
To transfer transaction information to the ledger
What is the general journal?
A basic journal used by every business
What is the purpose of preparing a trial balance?
To prove the mathematical equality of debits and credits after posting
What type of error will the trial balance detect?
Posting wrong amount to an account
What is the first step in preparing a trial balance?
List account numbers, titles and balances
What is the result of a transposition error in the trial balance?
A difference between totals that is divisible by 9
What is the purpose of checking the account balances in the ledger with the trial balance?
To verify the account balances in the ledger
What is the last step in preparing a trial balance?
Verify equality of debit and credit columns
What is the purpose of posting in the accounting process?
To transfer journal entries to ledger accounts
In the journal entry dated Oct 1, 2015, what amount did the Owner invest in the business?
$15000
What is contained in the general ledger?
All asset, liability, equity, revenue, and expense accounts
What is recorded in the accounts affected column in the journal?
Debits and credits
What steps are involved in the process of posting?
Enter date in account to be debited and amount to be credited
Test your knowledge on recording transactions in an accounting system, debit and credit procedures, the chart of accounts, and different types of accounting transactions. Identify what is considered a transaction in a given scenario.
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