Chapter 3
Chapter 3 Review
_____ 1. The process that begins with recording business transactions into a journal and ends with completion of a post-closing trial balance is the:
a) calendar year.
b) natural business years.
c) fiscal year.
d) accounting cycle.
_____ 2. The twelve-month period a business chooses for its accounting period is a(n):
a) calendar year.
b) accounting period.
c) fiscal year.
d) accounting cycle.
_____ 3. The time period for which an income statement is prepared is a (an):
a) calendar year.
b) accounting period.
c) fiscal period.
d) accounting cycle.
_____ 4. Financial statements that are prepared for a period shorter than a year are called:
a) accounting period statements.
b) fiscal year statements.
c) interim statements.
d) journal statements.
_____ 5. The first step of the accounting cycle is:
a) recording journal entries.
b) posting to the ledger.
c) preparing a trial balance.
d) analyzing business transactions.
_____ 6. A journal entry affecting three or more accounts is called a:
a) multi-level entry.
b) multi-step entry.
c) compound entry.
d) simple entry.
_____ 7. Business transactions are first recorded in the:
a) ledger.
b) journal.
c) trial balance.
d) balance sheet.
_____ 8. The journal described as the simplest form is a (an):
a) special journal.
b) interim journal.
c) accounting journal.
d) general journal.
_____ 9. Transactions listed in chronological order appear in the:
a) ledger.
b) trial balance.
c) journal.
d) balance sheet.
_____ 10. Which of the following would be considered a book of original entry?
a) Ledger
b) Journal
c) Trial balance
d) Work sheet
_____ 11. Which of the following would be considered the book of final entry?
a) Ledger
b) Journal
c) Trial balance
d) Work sheet
_____ 12. The process of initially recording business transactions in a journal is:
a) sliding
b) posting
c) journalizing
d) transposing
_____ 13. The account titles to be used in the journal are provided in the:
a) chart of accounts.
b) trial balance.
c) journal.
d) balance sheet.
_____ 14. When recording a transaction in a journal, the account listed first is always the:
a) debit.
b) credit.
c) increase.
d) decrease.
_____ 15. How are credits distinguished from debits in the journal?
a) A line separation
b) A different color
c) Indenting
d) There is no distinction
_____ 16. The journal entry to record the purchase of equipment for cash is:
a) debit Cash, credit Equipment.
b) debit Equipment, credit Cash.
c) debit Equipment Expense, credit Cash.
d) credit Cash, debit Equipment Expense.
_____ 17. The journal entry debiting Cash and crediting Capital would be a result of a(n):
a) withdrawal.
b) expense.
c) investment.
d) revenue.
_____ 18. If you debited Prepaid Insurance, you most likely will:
a) credit Fees Earned.
b) debit Cash.
c) credit Insurance Expense.
d) credit Cash.
_____ 19. The entry to record the payment of office salaries would be:
a) Cash
Accounts Receivable
b) Cash
Salaries Expense
c) Salaries Expense
Accounts Payable
d) Salaries Expense
Cash
_____ 20. When the cell phone bill is paid, which of the following entries would be recorded?
a) Cell Phone Expense
Cash
b) Cash
Cell Phone Expense
c) Cell Phone Expense
Accounts Payable
d) None of these answers is correct.
_____ 21. Which of the following entries records the owner taking cash for personal use?
a) Wage Expense, debit; Cash, credit.
b) Capital, debit; Cash, credit.
c) No entry is necessary since the owner owns the cash and the entire business.
d) Withdrawals, debit; Cash, credit.
_____ 22. During the month of October, Matthew invested $5,000 in starting his company, Matthew’s Online Service. The proper journal entry would be:
|a) Cash |5,000 | |
|Matthew’s, Capital | |5,000 |
|b) Matthew’s, Capital |5,000 | |
|Cash | |5,000 |
|c) Cash |5,000 | |
|Online Fees | |5,000 |
|d) Matthew’s, Capital |5,000 | |
|Cash | |5,000 |
_____ 23. Which of the following entries records the acquisition of office supplies on account?
|a) Office Supplies |2,000 | |
|Cash | |2,000 |
|b) Office Supplies |2,000 | |
|Accounts Payable | |2,000 |
|c) Equipment |2,000 | |
|Accounts Payable | |2,000 |
|d) Equipment |2,000 | |
|Accounts Receivable | |2,000 |
_____ 24. During the month of November, Sharp advertised on the internet. Sharp received the bill for $60 in November, but waited until December to pay the advertising expense. The journal entry to record the bill in November is:
|a) Advertising Expense |60 | |
|Accounts Receivable | |60 |
|b) Advertising Expense |60 | |
|Accounts Payable | |60 |
|c) Accounts Payable |60 | |
|Advertising Expense | |60 |
|d) The journal entry is not | | |
|made in November | | |
_____ 25. In the month of June, Davis Computers paid three months' rent in advance. The journal entry to record this transaction is:
a) Prepaid Rent
Cash
b) Rent Expense
Cash
c) Cash
Prepaid Rent
d) Cash
Rent Expense
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