2024The Accounting Process

Which of the following represents the expanded basic accounting equation?

• Assets = Liabilities + Common Shares + Dividends – Income – Expenses

• Assets + Dividends + Expenses = Liabilities + Equity + Income

• Assets – Liabilities – Dividends = Equity + Income – Expenses

• Assets = Income + Expenses – Liabilities

The basic sequence in the accounting process can best be described as:

• Transaction, journal entry, source document, ledger account, trial balance.

• Source document, transaction, ledger account, journal entry, trial balance.

• Transaction, source document, journal entry, trial balance, ledger account.

• Transaction, source document, journal entry, ledger account, trial balance.

Which of the following statements is/are true? I. The listing of all of the accounts available for use in a company's accounting system is known as the General Ledger. II. The term associated with "left" or "left-side" is Credit. III. The basic accounting equation is Assets + Liabilities = Capital. IV. The accounting equation should remain in balance because every transaction affects only two accounts. V. The Accounting Cycle represents the steps or accounting procedures normally used by entities to record transactions and prepare financial statement. It implements the accounting process. VI. A corporation's net income and distributions to stakeholders are eventually recorded in the income summary.

• II, IV, V, VI

• V

• I, V, VI

• I, V

The following comments all relate to the recording process. Which of these statements is correct?

• The general ledger is a chronological record of transactions

• The general ledger is posted from transactions recorded in the general journal.

• The trial balance provides the primary source document for recording transactions into the general journal.

• Transposition is the transfer of information from the general journal to the general ledger.

Choose the incorrect statement

• An accounting information system is designed to collect data about each transaction and event that should be recorded by an entity during a reporting year

• Posting is a transfer process which reclassifies chronological information into account classification format in the ledger

• In recording transactions, an external transaction is more likely to be overlooked and not recorded than is an internal transaction.

• A trial balance is prepared after adjusting entries are recorded but before closing entries.

Which of the following is not optional?

• use of an Income Summary account

• preparation of the Worksheet

• making adjusting entries

• preparation of Post-Closing Trial Balance

Given the dual effects of accountable events, an increase in a liability cannot possibly be accompanied by a (an):

• increase in asset

• decrease in equity

• decrease in asset

• no effect on assets

Which of the following statements is true? I. The two basic concepts or theories underlying double-entry bookkeeping are Duality and Equilibrium II. The reason why expense is recorded as a debit entry to an expense account is that expenses decrease owner’s equity. III. The effects of revenue and expenses upon owners’ equity explains the debit and credit rules relating to the recording of revenue and expenses IV. All activities of a business are recorded in its accounting system V. The accounting process of determining how events affect assets, liabilities, owners’ equity, revenue and expenses of the enterprise is called “Measuring the effects.”

• I, II, IV

• I, II, III

• III, IV, V

• I, II, III, V

Which of the following statements correctly relate to single-entry system?

I. Accrual basis financial statements cannot be prepared under a singleentry bookkeeping system II. Under single-entry bookkeeping system financial statements are not likely to be fairly presented in accordance with GAAP III. Cash Receipts and Cash Disbursement Journals are utilized in both a single-entry bookkeeping system and a double-entry bookkeeping system IV. Internal control is inadequate under a single-entry bookkeeping system V. Subsidiary ledger is utilized only in a double-entry bookkeeping system but not in a single-entry bookkeeping system

• II, IV

• II, III, IV, V

• I, III, IV

• I, II, III, IV, V

The following statements relates to the double-entry system and the single-entry system. Choose the correct statements.

I. Merchandise inventory account is not recognized under single-entry bookkeeping II. Net income or loss under single entry bookkeeping is computed using an approach that directly matches cost with revenue. III. Under a Double-entry system, both general and special journals are used while under a single-entry system, only special journals are used. IV. Double-entry system is sometimes known as transaction approach of accounting for assets, liabilities, equity, revenue and expenses. V. Double-entry system is the generally acceptable method of bookkeeping because it offers a more accurate and more complete income measurement than single-entry.

• I, III, V

• I, V

• III, IV, V

• I, III, IV, V