Accounting Cycle Quiz

Which of the following is the first step in the accounting cycle?

• Post to Ledgers

• Source Documents

• Trial Balance

• Income Statement

Which of the following is NOT typically considered a source document in accounting?

• Invoices

• Receipts

• Financial correspondences

• Balance Sheet

What is the main purpose of source documents in the accounting cycle?

• To summarize financial performance

• To provide original information for transactions

• To calculate profit and loss

• To prepare the balance sheet

After posting to journals, what is the next step in the accounting cycle according to the diagram?

• Post to Ledgers

• Trial Balance

• Income Statement

• Balance Sheet

A company receives a bank paying-in slip and a cheque counterfoil. According to the accounting cycle, what should be the company's next action after collecting these documents?

• Prepare the income statement

• Post the information to journals

• Create the balance sheet

• Prepare the trial balance

Which of the following is NOT a book of original entry or journal?

• Sales journal

• Petty cash book

• General ledger

• Cash book

What is the main purpose of constructing a trial balance in accounting?

• To calculate profit or loss

• To check the arithmetical accuracy of double entry records

• To record daily transactions

• To show the financial position at the end of the period

Which ledgers are used to post classified information from journals in the double entry system?

• General ledger, sales ledger, purchases ledger, cash book, and petty cash book

• Sales journal, purchases journal, returns inwards journal, cash book

• Income statement, balance sheet, trial balance

• Assets ledger, liabilities ledger, capital ledger

Explain the difference between an income statement and a balance sheet.

• Income statement shows assets and liabilities; balance sheet shows profit or loss

• Income statement records daily transactions; balance sheet records only cash transactions

• Income statement calculates profit or loss for a period; balance sheet shows the financial position at the end of the period

• Income statement is a type of journal; balance sheet is a type of ledger

A business has completed all the steps up to posting to ledgers. What should be the next step to ensure the records are arithmetically accurate?

• Prepare the income statement

• Construct a trial balance

• Prepare the balance sheet

• Classify source documents