Finacre - PQ1

The debit and credit analysis of a transaction normally takes place when the

• entry is posted to a subsidiary ledger.

• entry is recorded in a journal.

• trial balance is prepared.

• financial statements are prepared.

Which of the following statements about a journal is false?

• It is not a book of original entry

• It provides a chronological record of transactions

• It helps to locate errors because the debit and credit amounts for each entry can be readily compared.

• It discloses in one place the complete effect of a transaction.

Which of the following statements about an account is true?

• In its simplest form, an account consists of 2 parts

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

• There are separate accounts for specific assets and liabilities but only one account for owner’s equity items.

• The left side of an account is the credit or decrease side

A ledger

• contains only asset and liability accounts

• should show accounts in alphabetical order

• is a collection of the entire group of accounts maintained by a company

• is a book of original entry

Posting:

• normally occurs before journalizing

• transfers ledger transaction data to the journal

• is an optional step in the recording process

• transfers journal entries to ledger accounts.

The normal balance of Drawings is

• Debit

• Credit

The normal balance of Accrued Expenses is

• Debit

• Credit

The normal balance of a contra account is

• the same as the normal balance of its related account

• on the debit side

• the opposite of the normal balance of its related account

• on the credit side

If accounts payable has debit postings of P170.000, credit postings of P140,000, and a normal ending balance of P60,000, which of the following was its beginning balance?

• P30,000 Cr.

• P30,000 Dr.

• P90,000 Cr.

• P90,000 Dr.

Mr. AJ, a sole proprietor has the following: Cash: P100,000, Inventory: P 400,000 Building: P650,000, and Accounts Payable: P 50,000. What is the amount of capital?

• P1,200,000

• P1,100,000

• P550,000

• P1,150,000