Foundation (MK) 2

Which of the following statements about an account is true?

• In its simplest form, an account consists of two 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

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 each be readily compared.

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

A ledger:

• contains only asset and liability accounts.

• should show accounts in alphabetical order.

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

• is a book of original entry.

A trial balance:

• is a list of accounts with their balances at a given time.

• proves the maintained accuracy of journalized transactions.

• will not balance if a correct journal entry is posted twice.

• proves that all transactions have been recorded.

A trial balance will not balance if:

• a correct journal entry is posted twice.

• the purchase of supplies on account is debited to supplies and credited to cash.

• an EGP 100 cash drawing by owner is debited to Owner's Drawing for EGP 1000 and credited to cash for EGP 100.

• an EGP 450 payment on account is debited to Accounts Payable for EGP 45 and credited to cash for EGP 45.

The principle which dictates that efforts (expenses) be matched with accomplishments (revenues) is the:

• revenue recognition principle

• cost principle

• periodicity principle

• matching principle

Adjusting entries are made to ensure that:

• revenues are recorded in the period in which they are earned.

• expenses are recognized in the period in which they are incurred.

• balance sheet and income statement accounts have correct balances at the end of an accounting period

• all of the above

One of the following statements about accrual basis of accounting is false.

That statement is

• Events that change a company's financial statements are recorded in the periods in which the events occur.

• Revenue is recognized in the period in which it is earned.

• Revenue is recorded only when cash is received, and expense is recorded only when cash is paid.

• This basis is in accord with generally accepted accounting principals.

Abdelrahman earned a salary of EGP 400 for the last week of September. He will be paid on October 1. The adjusting entry for Abdelrahman's employer at September 30 is:

• Dr. Salaries expense....400

  Cr. Salaries Payable...400

• No entry is reqired

• Dr. Salaries Expense..400

  Cr. Cash...400

• Dr. Salaries payable..400

  Cr. cash..400

Accounts that normally have debit balances are:

• assets, expenses and revenues.

• assets, expenses and owner's capital.

• assets, expenses ad owner's drawings.

• assets, owner's drawings, and expenses.