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Accounting Cycle

Total questions: 100

Worksheet time: 1hrs 5mins

Name
Class
Date
1.

Documents prepared immediately after a transaction takes place is called

a)

first document

b)

source document

c)

open document

d)

transaction

2.

Which of these documents records the quantity and cost of items bought or sold?

a)

Teller

b)

Invoice

c)

Cheque

d)

Letter of enquiry

3.

Which of these is NOT a use of source documents?

a)

They act as proof to show that the transaction recorded in the books of accounts occurred.

b)

They help in the preparation of the financial statements.

c)

They provide better internal control and reporting.

d)

The help in determining loyal customers

4.

One of the uses of source documents is that it

a)

helps in identifying troublesome customers

b)

identifying the source of all problems in a business

c)

helps in analyzing business activities.

d)

attracting more buyers

5.

The first step in the recording process is to

a)

prepare financial statements.

b)

analyze each transaction for its effect on the accounts.

c)

post to a journal.

d)

prepare a trial balance.

6.

After transaction information has been recorded in the journal, it is transferred to the

a)

trial balance.

b)

income statement.

c)

book of original entry.

d)

ledger.

7.

The usual sequence of steps in the transaction recording process is

a)

journal --> analyze --> ledger.

b)

analyze --> journal --> ledger.

c)

journal --> ledger --> analyze.

d)

ledger --> journal --> analyze.

8.

A debit is not the normal balance for which of the following?

a)

Asset account

b)

Drawings account

c)

Expense account

d)

Capital account

9.
An invoice used as a source document for recording a sale on account.
a)
source document
b)
sales invoice
c)
check
d)
entry
10.

The left side of an account is

a)

blank.

b)

a description of the account.

c)

the debit side.

d)

the balance of the account.

11.

Issued by the bank to the account holder at the end of the month.

a)

Receipt

b)

Payment Voucher

c)

Cheque Stubs

d)

Bank Slip

e)

Bank Statement

12.

The left side of an account is

a)

blank.

b)

a description of the account.

c)

the debit side.

d)

the balance of the account.

13.

On January 14, Maxine Industries purchased supplies of $900 on account. The entry to record the purchase will include

a)

a debit to Supplies and a credit to Accounts Payable.

b)

a debit to Supplies Expense and a credit to Accounts Receivable.

c)

a debit to Supplies and a credit to Cash

d)

a debit to Accounts Receivable and a credit to Supplies.

14.

The procedure of transferring journal entries to the ledger accounts is called

a)

journalizing.

b)

analyzing.

c)

reporting.

d)

posting.

15.

What business own?

a)

Liability

b)

Asset

c)

Property

d)

Net Worth

16.

Assets = Liabilities +...................

a)

owners equity

b)

profit

c)

loss

d)

assets

17.

debts that a firm owes to others.

a)

Annual Report

b)

Assets

c)

Liabilities

d)

Accounting Cycle

18.

The accounting cycle begins by recording _____________ in the form of journal entries.

a)

Business transactions

b)

Financial information

c)

Corporate minutes

d)

Business contracts

19.

After a business transaction has occurred, journal entries are recorded in the

a)

ledger

b)

journal

c)

expense accounts

20.

Once journal entries are recorded, they can be posted to:

a)

ledger

b)

income statement

c)

expenses account

21.
An invoice used as a source document for recording a sale on account.
a)
source document
b)
sales invoice
c)
check
d)
entry
22.

Which type of business does NOT provide physical goods to a customer?

a)

Goods business

b)

Service business

c)

Tangible business

23.

Which of the following is NOT an example of a liability?

a)

Unearned service revenue

b)

Accounts receivable

c)

Accounts payable

24.

Which of the following does a debit represent?

a)

An increase in any account

b)

The right side of the accounting equation

c)

The left side of the accounting equation

25.

Select all Asset accounts.

a)

Cash

b)

Accounts Payable

c)

Supplies

d)

Accounts Receivable

e)

Revenue

26.

Select all Liability accounts.

a)

Unearned Service Revenue

b)

Cash

c)

Accounts Payable

d)

Notes Payable

e)

Expenses

27.

Select all Owner's Equity accounts.

a)

Revenue

b)

Cash

c)

Owner's Capital

d)

Notes Payable

e)

Expenses

28.

Which of the following indicates at least two accounts are affected by a transaction?

a)

Double-entry system

b)

Normal balance

c)

Debit

d)

Credit

29.

Which of the following refers to the balance an account is always supposed to have?

a)

Normal balance

b)

Debit

c)

Credit

d)

Double Entry System

30.

Where would an increase in an asset be placed on a T-account?

a)

Left side

b)

Right side

c)

Horizontal line

d)

This is not placed on a T-account

31.

A company immediately receiving $100 cash for providing a service would record the transaction by debiting which account?

a)

Cash

b)

Service revenue

c)

Accounts receivable

32.

The normal balance of an asset account is _________.

a)

debit

b)

credit

33.

The normal balance of a liability account is _________.

a)

debit

b)

credit

34.

The normal balance of most owner's equity accounts is _________.

a)

debit

b)

credit

35.

A Journal is like a diary of a business because it is the only place where complete details of a transaction are recorded.

a)

True

b)

False

36.

If an error is discovered immediately after journalizing, a single line should be placed through the incorrect data and the correct information should be written above it.

a)

True

b)

False

37.

An expense account always has this normal balance side.

a)

credit

b)

debit

38.

What is the most appropriate source document for the following situation:  Paid the current month's electric bill of $95 with check.

a)

Invoice

b)

Receipt

c)

Check Stub

d)

Memo

39.

A(n) ______ is any type of business paper that verifies that a transaction occurred.

a)

Memo

b)

Accounting Cycle

c)

Journal

d)

Source Document

40.

Which of the following statements is INCORRECT?

a)

Assets – Liabilities = Capital

b)

Liabilities + Assets = Capital

c)

Assets – Capital = Liabilities

d)

Liabilities + Capital = Assets

41.

Which of the following should NOT be called ‘Sales’?

a)

Office equipment sold

b)

Goods sold for cash

c)

Goods sold on credit

d)

Sale of item previously included in ‘Purchases’

42.

What is the basic accounting equation?

(a)  

43.

Capital (owner's equity) is the value of the owners' investment in the business after subtracting liabilities from assets.

a)

True

b)

False

44.

 

Which correctly shows a list of assets and liabilities?

a)

Assets: mortgage, car loan, land

Liabilities: retirement savings, cash, credit card loans

b)

Assets: building, cash in hand, accounts receivable

Liabilities: loans, accounts payable, mortgage

c)

Assets: creditors, prepaid expenses, loans

Liabilities: stocks, accounts receivable, car

d)

None of the above

45.

What must the owner's equity equal if assets equal $1,800 and liabilities equal $800?

a)

$2,600

b)

$800

c)

$1,000

46.

If liabilities equal $400 and owner's equity equals $800, what do the assets equal?

a)

$400

b)

$1,200

c)

$800

47.

Assets = Liabilities + Owner's Equity

Assets - 200,000

Liabilities- ?

Owner's Equity- 90,000

a)

$200,000

b)

$110,000

c)

$290,000

48.

Assets = Liabilities + Owner's Equity

Assets - 100,000

Liabilities- 25,000

Owner's Equity- ?

a)

$125,000

b)

$25,000

c)

$75,000

49.

Assets = Liabilities + Owner's Equity

Assets - ?

Liabilities- 25,000

Owner's Equity- 100,000

a)

$125,000

b)

$25,000

c)

$100,000

50.
Accounting is referred to as the "language of ___________________."
a)
profit
b)
life
c)
accounting
d)
business
51.
The left side of a T-Account is called
a)
Debit
b)
Credit
c)
Left Side
d)
Right Side
52.
The name given to an account
a)
account title
b)
capital
c)
expense
d)
revenue
53.
Amount owed by a business
a)
liability
b)
asset
c)
capital
d)
account
54.
What is assets? 
a)
Cash in the business
b)
Anything that a creditor has financial claim to 
c)
What remains after liabilities are paid 
d)
any item or property owned by the business
55.

It is the art of analyzing financial transactions and economic events, recording them, classifying them into accounts, summarizing them, reporting, and interpreting the results.

a)

Bookkeeping

b)

Journalizing

c)

Accounting

d)

Auditing

56.
How would an accountant record an increase in cash?
a)
Debit
b)
Credit
57.
How would an accountant record an increase in sales?
a)
debit
b)
credit
58.
A list of accounts used by a business.
a)
accounting equation
b)
chart of accounts
c)
temporary accounts
d)
permanent accounts
59.
An accounting device used to analyze transactions.
a)
T account
b)
temporary account
c)
personal account
d)
permanent account
60.

Business and its owner are two separate entities. The business’s transactions must be accounted separately from the owner’s transactions

a)

Materiality Concept

b)

Business Entity Concept

c)

Going Concern Concept

d)

Objectivity Concept

61.

Accounts are prepared with the assumption that the business or organization will continue to operate for a foreseeable future.

a)

Materiality Concept

b)

Business Entity Concept

c)

Going Concern Concept

d)

Objectivity Concept

62.

when the owner takes money out of the business's account it is called _________?

a)

credit

b)

drawings

c)

debt

d)

borrowing

63.

The owner invests personal cash in the business. Assets will.......

a)

Increase

b)

Decrease

c)

No effect

64.

The owner withdraws cash from the business for personal use. Owner's Equity will...........

a)

Increase

b)

Decrease

c)

No Effect

65.
Assets taken out of a business for the owner's personal use
a)
capital
b)
withdrawals
c)
equities
d)
revenue
66.
A business owned by one person
a)
service business
b)
revenue
c)
expense
d)
proprietorship
67.

It is a small amount of cash kept at hand for making immediate payments for miscellaneous minor expenses.

a)

Gcash

b)

Petty Cash

c)

Bitcoin

d)

Change

68.

Which of the following refers to money being exchanged between businesses and customers electronically?

a)

Automatic fund deposit

b)

Electronic cash withdrawal

c)

Automatic cash withdrawal

d)

Electronic funds transfer

69.

A petty cash fund was initially established with $200.

A gas purchase of $25,

a paper purchase of $32

and a miscellaneous expense of $15 were made.

What would be the journal entry to replenish the fund?

a)

Debit: Cash ($72); Credit: Petty Cash ($72)

b)

Debit: Petty Cash ($200); Credit: Cash ($200)

c)

Debit: Fuel Expense ($25), Supplies ($32), Misc. Expenses ($15); Credit: Cash ($72)

d)

Debit: Cash ($72); Credit: Fuel Expense ($25), Supplies ($32), Misc. Expenses ($15)

70.

Which of the following refers to the process of verifying the bank statement amounts match company cash amounts?

a)

Bank adjustment

b)

Bank reconciliation

c)

Statement revision

d)

Company cash reconciliation

71.

Which of the following accounts would be credited to set up a petty cash fund?

a)

Cash

b)

Petty cash

c)

Withdrawals

d)

Miscellaneous expense

72.

Which transactions happen most frequently?

a)

miscellaneous expenses

b)

equity transfers

c)

cash

d)

supply expenses

73.

A checking account

a)

is an account from which payments can be ordered

b)

is an account used for a company ot invest cash reserves

c)

is an account from which funds can be borrowed to cover expenses

d)

is all the above

74.

A bank form which lists checks, currency and coin an account holder wishes to add to an account is a

a)

check stub

b)

deposit slip

c)

bank statement

d)

petty cash reconciliation

75.

A signature or the stamp on the back of a check transferring ownership is an endorsement.

a)

True

b)

False

76.

An endorsement consisting only of the endorser's signature is a

a)

restrictive endorsement

b)

blank endorsement

c)

special endorsement

d)

third party endorsement

77.

A post dated check

a)

is one written with a future date

b)

is the date the check is posted to the account

c)

is one that cannot be processed because the maker has made it invalid

d)

is one the bank has processed

78.

A report of deposits, withdrawals, and bank balances is a

a)

deposit slip

b)

check stub

c)

bank statement

d)

bank reconciliation

79.

A check the bank refuses to pay is called a

a)

canceled check

b)

post dated check

c)

endorsed check

d)

dishonored check

80.

A bank may choose not to pay a check because

a)

A. the signature does not match that of the maker's on file

b)

B. the account has insuffiicient funds

c)

C. the memo field on the check was left blank

d)

Both A and B

e)

All the above

81.

A Petty Cash account

a)

A. is used to pay for small expenses where writing a check is not cost-effective

b)

B. must be reconciled daily by its custodian

c)

C. is not posted to the General Journal

d)

Both A and B

e)

All of the above

82.
Ownership of a check cannot be transferred.
a)
True
b)
False
83.
When petty cash is replenished, Petty Cash is debited and Cash is credited.
a)
True
b)
False
84.
Using a memorandum as the source document for a dishonored check is an application of the accounting concept Objective Evidence.
a)
True
b)
False
85.
A bank requires that the signature of the person authorized to sign checks is included on the signature card.
a)
True
b)
False
86.
An endorsement on the back of a check indicating that the check is to be accepted for deposit only is a 
a)
blank endorsement
b)
special endorsement
c)
restrictive endorsement
d)
deposit endorsement
87.
The entry to establish a $200 petty cash fund is
a)
debit Petty Cash, $200; credit Misc Exp, $200
b)
debit Cash, $200; credit Petty Cash, $200
c)
debit Misc Exp, $200; credit Cash, $200
d)
debit Petty Cash, $200; credit Cash, $200
88.
An endorsement on the back of a check with "Pay to the order of" and a new check owner's name is a
a)
blank endorsement
b)
special endorsement
c)
restrictive endorsement
d)
deposit endorsement
89.
A petty cash fund is always replenished
a)
daily
b)
weekly
c)
at the end of the month
d)
none of these
90.
A lost check with a blank endorsement on it can be cashed by
a)
anyone who has the check
b)
only the person whose name follows "Pay to the order of"
c)
only the person who endorsed the check
d)
no one
91.
If any kind of error is made in preparing a check
a)
VOID should be written on the check
b)
VOID should be written on the check stub
c)
a new check should be prepared
d)
all of the above
92.

Checks that have been written by a company but have not yet been charged to the company's checking account are referred to as  (a)   checks.

93.

If the Bank Statement balance does not agree with the bank balance of the Cash Book, then _________.

a)

the Cash Book should be regarded as the correct record of transactions

b)

the Bank Statement should be regarded as the correct record of transactions

c)

a Bank Reconciliation Statement should be prepared

d)

the difference could be either a current asset or current liability

94.

On the journal page, the date is written

a)

For each entry

b)

Only for the first entry

c)

On the first line of each column

d)

None of these

95.

When cash is paid for supplies

a)

Supplies is increased

b)

Supplies is credited

c)

The balance of supplies is decreased

d)

None of these

96.

A single line ruled across the journal's amount columns indicates?

a)

The date is the last day of the month

b)

The totals have been verified as correct

c)

The columns are to be totaled

d)

None of these

97.

When cash is received from sales, the amount is recorded in the

a)

Sales credit column, cash debit column

b)

Sales debit column, cash credit column

c)

General credit column and cash debit column

d)

General debit column and cash credit column

98.

Each transaction recorded in a journal is a(n)

a)

Entry

b)

Source Document

c)

Journalizing

d)

Invoice

99.

A business paper from which information is obtained for a journal entry

a)

Source document

b)

Entry

c)

Sales Invoice

d)

Receipt

100.

A form for recording transactions in chronological order

a)

Entry

b)

Journalizing

c)

Journal

d)

Register

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