Chapter 3 - College Accounting: A Practical Approach

Question 1

What is something that takes place over an accounting period and includes the normal accounting procedures?

Answer 1

Accounting Cycle

Question 2

What is an accounting period?

Answer 2

Period of time covered by the income statement

Question 3

Is the accounting period one set period of time or can it differ?

Answer 3

It can differ with interim reports as well as on differently annual schedules

Question 4

What is a calendar year?

Answer 4

January to December

Question 5

What is a fiscal year?

Answer 5

Covers any 12 month period that the company chooses

Question 6

What is a natural business year?

Answer 6

A fiscal year that ends at the same time that the business has a slow season

Question 7

What is another name for a journal entry?

Answer 7

Book of Original entry

Question 8

What does a general journal do?

Answer 8

Records information from transactions in chronological order

Question 9

What does posting do?

Answer 9

It transfers information from a journal to the ledger

Question 10

What is cross referencing?

Answer 10

Adding the posting reference that relates back to where the transaction is located

Question 11

What refers to the individual accounts with their balances?

Answer 11

Trial balance

Question 12

What are three things that always happen when making a correction?

Answer 12

Striking it out, updating above & initialling the correction

Question 13

What is one difference between making a correction to a transaction that is posted versus a non-posted transaction?

Answer 13

Updating the running balance

Question 14

When must you include an explanation of a correction?

Answer 14

When you are correcting the account a transaction is reflected in

Question 15

What are the three steps leading up to the preparation of the trial balance?

Answer 15

1. Transactions occur
2. Analyze and record the transactions in the journal
3. Post from the journal to the ledger

Question 16

How many steps total are in the accounting cycle?

Answer 16

9

Question 17

What is the shape of the accounting cycle?

Answer 17

Circle

Question 18

What is journalizing?

Answer 18

The process of recording transactions in a journal

Question 19

Are journal and ledgers kept in the same book?

Answer 19

NO

Question 20

What accumulates to create a ledger?

Answer 20

Journals

Question 21

How many formalities to a journal entry are there?

Answer 21

6

Question 22

What in a journal is recorded first, debits or credits?

Answer 22

Debits

Question 23

Is the explanation put above or below your debit and credits?

Answer 23

Below

Question 24

How many blank lines should be between each journal entry?

Answer 24

One

Question 25

When a journal effects 3 or more accounts, what is it called?

Answer 25

A compound journal entry

Question 26

Does the month and year have to be recorded with each entry in the journal?

Answer 26

No

Question 27

What, out of the date, gets recorded with each journal entry?

Answer 27

The day

Question 28

When would you put the month and year again in a journal?

Answer 28

When you start a new page or month

Question 29

What accounts are supplies considered?

Answer 29

Asset until used up

Question 30

Once supplies get used up, where are they recorded?

Answer 30

Expense account

Question 31

When do you record an expense? When they occur or when they are paid for?

Answer 31

When they occur

Question 32

Are footings required in three column accounts?

Answer 32

NO

Question 33

How many steps are there from posting a journal entry to the ledger?

Answer 33

4

Question 34

What is recorded in the PR on the ledger?

Answer 34

General Journal #

Question 35

What is recorded in the PR on the Journal?

Answer 35

The account number posted to

Question 36

Must transactions be posted in the ledger in the order they occurred?

Answer 36

NO, they can also be posted with the debits first

Question 37

Is the PR column always got info in it?

Answer 37

No, only once something has been posted

Question 38

Can the trial balance balance but still be incorrect?

Answer 38

YES

Question 39

What is the number one thing you should do if you find the trial balance doesn’t balance?

Answer 39

Stay Calm

Question 40

If the difference on the trial balance is 10, 100, 1000, what does this mean?

Answer 40

There is likely a math error

Question 41

If the difference is equal to one of another account, what does this mean?

Answer 41

Amount could have been omitted or wasn’t in the general journal

Question 42

If you divide the difference of the trial balance by 2, what are you checking?

Answer 42

If the debit and credit were reversed

Question 43

If the trial balance difference can be divided by 9, what does this mean?

Answer 43

A transposition or slide may have occurred

Question 44

What is a transposition?

Answer 44

The re-arrangement of numbers / dyslexia

Question 45

What is a slide?

Answer 45

Adding or deleting zeros when writing the number

Question 46

Worst case when you can’t find the error in the trial balance, what do you do?

Answer 46

Take a break