Accounting Basics Quiz

What is the purpose of a journal in accounting?

• To prepare financial statements

• To record business transactions in chronological order

• To calculate net income

• To classify transactions by account

Which of the following best describes the double-entry system?

• Every transaction is recorded only once

• Every transaction affects at least two accounts

• Only cash transactions are recorded

• Transactions are recorded at the end of the month

A company purchases office supplies worth $500 on credit. Which accounts are affected?

• Office Supplies (Debit), Accounts Payable (Credit)

• Office Supplies (Credit), Accounts Payable (Debit)

• Cash (Debit), Office Supplies (Credit)

• Accounts Receivable (Debit), Office Supplies (Credit)

What is the main function of a ledger?

• To organize transactions by account

• To summarize financial statements

• To record transactions chronologically

• To detect errors in accounting entries

How is a journal entry for paying rent of $1,000 recorded?

• Rent Expense (Debit), Cash (Credit)

• Cash (Debit), Rent Expense (Credit)

• Rent Expense (Credit), Accounts Payable (Debit)

• Accounts Payable (Debit), Cash (Credit)

What does a trial balance check for?

• Profit and loss

• Whether total debits equal total credits

• The accuracy of financial statements

• The number of transactions recorded

If total debits do not equal total credits in a trial balance, what does it indicate?

• The company is profitable

• An error in journalizing or posting transactions

• The company has no liabilities

• The financial statements are complete

Which of the following is an example of an asset account?

• Accounts Payable

• Office Supplies

• Sales Revenue

• Wages Payable

In which book of accounts is the first record of a transaction made?

• Ledger

• Journal

• Trial Balance

• Balance Sheet

What happens after transactions are recorded in the journal?

• They are directly included in the financial statements

• They are posted to the ledger

• They are ignored if the trial balance is balanced

• They are summarized in the income statement