Journal Entry and Ledger Quiz

What is a journal entry?

• A record of financial transactions

• A summary of all accounts

• A report of cash flow

• A list of expenses

In a journal entry, what does a debit entry do?

• Increases an asset or expense

• Decreases an asset or expense

• Increases a liability

• Decreases owner's equity

Which of the following is an example of a debit entry?

• Cash sales

• Rent expense

• Owner's equity

• Accounts payable

What does a ledger do?

• Shows the company's profit

• Tracks all financial transactions in detail

• Summarizes revenues and expenses

• Displays cash flow

If you record a sale of £500 in cash, which accounts are affected?

• Debit Cash £500; Credit Sales Revenue £500

• Debit Sales Revenue £500; Credit Cash £500

• Debit Cash £500; Credit Accounts Receivable £500

• Debit Accounts Receivable £500; Credit Cash £500

What is a trial balance used for?

• To measure profits

• To ensure total debits equal total credits

• To track expenses

• To list all cash transactions

If a company has total debits of £3,000 and total credits of £2,500, what is the difference?

• £500 debit

• £500 credit

• The accounts are balanced

• £1,000 deficit

Which account would you debit when you pay a utility bill of £100?

• Cash

• Utilities Expense

• Accounts Payable

• Owner's Equity

In the trial balance, which side must total debits equal?

• Total expenses

• Total assets

• Total credits

• Total revenues

If you purchase equipment for £1,000 on credit, which journal entry is correct?

• Debit Equipment £1,000; Credit Cash £1,000

• Debit Equipment £1,000; Credit Accounts Payable £1,000

• Debit Accounts Payable £1,000; Credit Equipment £1,000

• Debit Cash £1,000; Credit Equipment £1,000