Basic Accounting Exam: Quiz! MCQ

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  • 1/10 Questions

    Which is the correct sequence for recording transactions and preparing financial statements?

    • Ledger, trial balance, journal, financial statements
    • Journal, ledger, trial balance, financial statements
    • Financial statements, trial balance, ledger, journal
    • Ledger, journal, trial balance, financial statements
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About This Quiz

This Basic Accounting Exam: Quiz! MCQ assesses fundamental accounting principles, focusing on transactions, account types, and financial statements. It tests skills crucial for understanding asset management and revenue recording, essential for aspiring accountants and professionals in finance.

Basic Accounting Exam: Quiz! MCQ - Quiz

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  • 2. 

    A debit entry to an account.

    • Increases liabilities

    • Increases OE

    • Increases Assets

    • Increases both a and b

    Correct Answer
    A. Increases Assets
    Explanation
    A debit entry to an account increases the assets of a company. This means that the company has received or acquired more resources or valuables, which are considered as assets. Therefore, the correct answer is "Increases Assets."

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  • 3. 

    Which account types normally have a credit balance?

    • Revenues

    • Liabilities

    • Expenses

    • Both a and b

    Correct Answer
    A. Both a and b
    Explanation
    Both revenues and liabilities normally have a credit balance because they represent increases in the owner's equity and amounts owed to external parties respectively. Revenues are the income earned by a business, which increases the owner's equity and is recorded as a credit. Liabilities, on the other hand, represent the amounts owed by a business to external parties, such as loans or accounts payable, and are also recorded as a credit. Therefore, both revenues and liabilities have credit balances in the accounting equation.

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  • 4. 

    The list of accounts with their balances is the:

    • Journal

    • Trial balance

    • Chart of accounts

    • Balance sheet

    Correct Answer
    A. Trial balance
    Explanation
    A trial balance is a list of all the accounts in a company's general ledger along with their respective balances. It is used to ensure that the total debits equal the total credits in the accounting system, which helps in identifying any errors or discrepancies. Therefore, the given answer is correct as it accurately describes the purpose and content of a trial balance.

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  • 5. 

    In a double-entry accounting system:

    • Liabilities, OE, and revenues all have normal debit balances

    • A debit entry is recorded on the left side of a T-account

    • Half of all the accounts have a normal credit balance

    • Both a and c are correct

    Correct Answer
    A. A debit entry is recorded on the left side of a T-account
    Explanation
    In a double-entry accounting system, a debit entry is recorded on the left side of a T-account. This means that when a transaction occurs, the amount is recorded on the left side of the T-account, which is known as the debit side. This is consistent with the general rule that assets, expenses, and dividends have normal debit balances. On the other hand, liabilities, owner's equity, and revenues have normal credit balances, which means they are recorded on the right side of the T-account. Therefore, the correct answer is that a debit entry is recorded on the left side of a T-account.

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  • 6. 

    Which accounts appear on which financial statement?

    • Balance sheet- receivables, land, payables; Income statement- Revenues, supplies

    • BS- cash, revenues, land; IS- expenses, payables

    • BS- Cash, receivables, payables; IS- revenues, expenses

    • BS- expenses, payables, cash; IS- revenues, receivables, land

    Correct Answer
    A. BS- Cash, receivables, payables; IS- revenues, expenses
    Explanation
    The balance sheet includes accounts such as cash, receivables, and payables, which represent the financial position of a company at a specific point in time. On the other hand, the income statement includes accounts such as revenues and expenses, which represent the company's financial performance over a period of time. Therefore, the correct answer is BS- Cash, receivables, payables; IS- revenues, expenses.

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  • 7. 

    An attorney performs services of $1,100 for a client and receives $400 cash with the remainder on the account. The journal entry for this would:

    • Debit cash, credit AR, credit service revenue

    • Debit cash, debit service revenue, credit AR

    • Debit cash, debit AR, credit service revenue

    • Debit cash, credit service revenue

    Correct Answer
    A. Debit cash, debit AR, credit service revenue
    Explanation
    The correct answer is debit cash, debit AR, credit service revenue. This is because the attorney receives $400 in cash, which is recorded as a debit to the cash account. The remaining amount of $700 is recorded as a debit to accounts receivable (AR), representing the amount owed by the client. Finally, the attorney performed services worth $1,100, which is recorded as a credit to the service revenue account.

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  • 8. 

    The beginning cash balance was $3,000. At the end of the period, the balance was $2,000. If total cash paid out during the period was 27,000, the number of cash receipts was:

    • 22000

    • 28000

    • 32000

    • 26000

    Correct Answer
    A. 26000
    Explanation
    The beginning cash balance was $3,000 and the ending cash balance was $2,000. This means that there was a decrease of $1,000 in the cash balance. The total cash paid out during the period was $27,000. Since the cash balance decreased by $1,000, and the total cash paid out was $27,000, it can be inferred that $26,000 was received as cash receipts during the period.

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  • 9. 

    The basic summary device of accounting is the:

    • Account

    • Ledger

    • Journal

    • Trial balance

    Correct Answer
    A. Account
    Explanation
    The basic summary device of accounting is an account. Accounts are used to record and track the financial transactions of a business. They provide a systematic way of organizing and summarizing financial information, allowing businesses to analyze their financial performance. Accounts are typically categorized into different types, such as assets, liabilities, equity, revenue, and expenses, to provide a clear picture of the financial position and performance of a business.

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  • 10. 

    The error of posting $500 as a $50 can be detected by:

    • Totaling each account's balance in the ledger

    • Dividing the out of balance amount by 2

    • Dividing the out of balance amount by 9

    • Examining the chart of accounts

    Correct Answer
    A. Dividing the out of balance amount by 9
    Explanation
    Dividing the out of balance amount by 9 can detect the error of posting $500 as $50 because if the error occurred, there would be a difference of $450 ($500 - $50) in the total balance. Dividing this difference by 9 would give a quotient of 50, indicating that the error was made in posting $450 to one account instead of another.

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  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Dec 13, 2012
    Quiz Created by
    Lnwilcox
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