Basic Accounting Principles and Chart of Accounts Review

Capital is a Revenue account

False

Errors discovered before entries are posted must be corrected with a correcting entry.

False

All corrections for posting errors should be made in a way that leaves no question as to the correct amount.

True

What is the last step in posting to the general ledger

Write the account number in the Post Ref of the general journal

The third division of the chart of accounts is the owner's equity division.

True

Determining that the amount of cash agrees with the balance of the Cash account in the accounting records.

proving cash

The liabilities are listed in alphabetical order in the chart of accounts.

False

The first digit of account numbers for accounts in the owner's equity ledger division is 4.

False

When adding a new expense account between accounts numbered 510 and 520, the new account is assigned 515.

True

An additional journal entry made to correct an incorrect journal entry.

correcting entry

If the payment of cash for rent was journalized and posted in error as a debit to Miscellaneous Expense instead of Rent Expense, the correcting entry will include a credit to Cash.

False

The only reason for the Post Ref columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if the posting is interrupted.

False

If an error requires a correcting entry, a memorandum is prepared as the source document describing the correction to be made.

True

If the credit balance for an accounts payable account is $500 and you pay $300 in cash towards the account, is the balance in the ledger a debit or a credit?

credit

A ledger that contains all accounts needed to prepare financial statements.

general ledger

If an error in posting is made but not discovered until additional postings have been made to the account, the correct posting should be made on the next available line in the correct account.

True

A number assigned to an account

account number

Each amount in the debit and credit columns of a general journal is posted to the account written in the Account Title column.

True

A group of accounts

ledger

What is the first step in posting to the general ledger?

Write the date

Writing an account title and number on the heading of an account.

opening an account

The last two digits in a 3-digit account number indicate the general ledger division of the account

False

If an incorrect amount is posted in an account, a line should be drawn through the incorrect amount, the correct amount should be written in above the correction, and the account balance should be recalculated.

True

The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.

file maintenance

If a debit is posted to an asset account, the amount of the debit will be subtracted from the previous account balance to determine the new account balance.

False

Because an account form has columns for the debit and credit balance of an account, it is often referred to as the balance-ruled account form.

True

Which expense account comes first in the chart of accounts?

Communications Expense

Source document for cash sales.

calculator tape

The two steps for opening an account are writing the account title and recording the balance.

False

Transferring information from a journal entry to a ledger account.

posting

The cash account is the first asset account and is numbered 110.

True

Source document for a correcting entry.

memorandum

There are five steps in posting an amount from the debit column of a general journal.

True

Drawing is an expense account

False

Source document for cash paid for capital.

receipt

What is the name of the account that is used when cash is withdrawn for use by the owner.

Drawing

The asset division accounts are numbered in the 200s

False

The asset accounts are listed in order of liquidity in the chart of accounts.

True

After a journal has been posted, the Post Ref column is completely filled in with account numbers

True

If a credit is posted to a liability account, the amount of the credit will be subtracted from the previous account balance to determine the new account balance.

False

What is the account title for the Revenue account.

Sales

In the general ledger, when debit exceed credits, the balance is a credit.

False

Cash is...

an asset

Supplies is an expense account.

False

What is the account number for Utilities Expense if Telecommunications Expense is 550 and Miscellaneous Expense is 540.

560

When there is a debit balance in the general ledger, a debit transaction will increase the current debit balance.

True

What is the abbreviation for credit?

cr

What is the abbreviation for debit?

dr

The liabilities division accounts start with 200.

True

The Post Ref numbers in the general ledger start with

G