FABM 1 WEEK 1

An accounting cycle is a series of recurring steps that usually start with

• preparing a trial balance

• preparing chart of accounts

• journalizing the business transactions

• analyzing the business transactions from source documents

Which of the following is a non-business transaction?

• receipt of electricity bill

• payment of rent in advance

• setting up of chart of accounts

• payment of advance salary to an employee just hired

Which of the following source documents provides evidence that cash is disbursed?

• loan application form

• billing statement

• official receipt

• deposit slip

Purchased of office table by issuing an interest-bearing promissory note will result in

• an increase in asset and liability

• an increase in asset and expense

• an increase in liability and expense

• an increase in asset and a decrease in another asset

A chart of accounts is a list of financial accounts set up, usually by an accountant, for an organization, and available for use by the bookkeeper for recording transactions in the organizations’ general ledger. They are arranged according to

• liquidity

• magnitude

• account classification

• order of appearance in business transactions