Bookkeeping Multiple Choice Questions

The accounting equation must remain in balance

• At some other point in the accounting cycle.

• Only when formal financial statements are prepared

• Only when journal entries are recorded.

• At all times.

Which of the following are subjected to strict regulations?

• Sole Proprietorship

• Corporations

• partnerships

• none of the above

Business operation that involves purchasing and converting raw materials into finished product.

• sole proprietorship

• Cooperative

• merchandising business

• Manufacturing business.

The double entry accounting system means

• Each transaction is recorded with two journal entries.

• Each item is recorded in a journal entry and then in a general ledger account.

• The dual effect of each transaction is recorded with a debit and a credit.

• All of these describe the double entry system.

In recording transactions

• The word “debit” means increase and the word “credit” means decrease

• Assets, expenses, and drawing accounts are debited for increases

• Liabilities, revenue, and drawing accounts are debited for increases

• Assets, expenses, and capital accounts are debited for increases.

The debit and credit analysis of a transaction normally takes place

• Before an entry is recorded in a journal.

• When the entry is posted to the ledger

• Only when journal entries are recorded.

• Only at the time the trial balance is prepared.

Which of the following events increases cash balance?

• Bank not granting loan

• Debtors paying the company

• Loan repayment to creditors

• Sale of stock on account

Which of the following reduce cash balances?

• Purchase of fixed assets

• Acquired assets on credit

• Purchase of stock on account

• Creditors grant loan.

A chart of Account begins with-

• Owners’ equity

• assets

• Liabilities

• expense

Assets to be sold, consumed or realized as part of the normal operating cycle are

• Current assets

• Noncurrent assets

• Classified as current and noncurrent in accordance with other criteria

• Noncurrent investments