Accounting Quiz

The accounting cycle begins with:

• Preparing a Trial Balance

• Identifying and analysing transactions

• Preparing financial statements

• Posting to the General Ledger

Answer explanation

The accounting cycle begins with identifying and analysing transactions, as this step lays the foundation for all subsequent processes, including posting to the General Ledger and preparing financial statements.

Which is a source document?

• Cash Receipts Journal

• Trial Balance

• Invoice

• Balance Sheet

Answer explanation

An invoice is a source document that provides evidence of a transaction, detailing the goods or services provided. In contrast, the Cash Receipts Journal, Trial Balance, and Balance Sheet are reports or summaries, not source documents.

Which journal records all cash received?

• CPJ

• CRJ

• DJ

• CJ

Answer explanation

The CRJ, or Cash Receipts Journal, specifically records all cash received by a business. This distinguishes it from other journals like CPJ (Cash Payments Journal), DJ (Daily Journal), and CJ (Cash Journal), which serve different purposes.

Which journal is used for credit purchases of goods?

• CRJ

• DJ

• CJ

• CPJ

Answer explanation

The CJ (Cash Journal) is used for recording credit purchases of goods. It tracks transactions where goods are bought on credit, making it the correct choice for this question.

What does the Debtors Journal record?

• Credit purchases

• Cash sales

• Credit sales

• Rent expenses

Answer explanation

The Debtors Journal specifically records credit sales, which are sales made on credit rather than cash. This is essential for tracking amounts owed by customers.

In the CRJ, sales are recorded as:

• Debit Sales, Credit Bank

• Debit Bank, Credit Sales

• Debit Sales, Credit Sales

• Debit Bank, Credit Bank

Answer explanation

In the CRJ, sales increase revenue, so we credit Sales. The corresponding cash or bank account increases, so we debit Bank. Thus, the correct entry is Debit Bank, Credit Sales.

The General Ledger is:

• A summary of all transactions grouped into accounts

• A list of source documents

• A record of only assets and liabilities

• The same as a Trial Balance

Answer explanation

The General Ledger is a summary of all transactions grouped into accounts, providing a comprehensive view of financial activity. It is not just a list of documents, nor limited to assets and liabilities, and differs from a Trial Balance.

The purpose of the Trial Balance is to:

• Show income and expenses

• Ensure debit = credit totals

• Calculate net profit

• List only assets

Answer explanation

The Trial Balance is primarily used to ensure that the total debits equal the total credits, confirming the accuracy of the bookkeeping entries. It does not directly show income and expenses or calculate net profit.

Which of the following is an income account?

• Rent Expense

• Sales

• Debtors Control

• Bank Loan

Answer explanation

Sales is an income account that represents revenue generated from selling goods or services. In contrast, Rent Expense is an expense account, Debtors Control is an asset account, and Bank Loan is a liability.

Which of the following is a liability?

• Capital

• Bank Loan

• Rent Expense

• Sales

Answer explanation

A bank loan is a liability because it represents money borrowed that must be repaid. In contrast, capital is equity, rent expense is a cost, and sales are revenue, none of which are liabilities.