Chapter 3 - Journal Entries and Underlying Theory

Question 1

What are the 10 steps of the accounting cycle?

Answer 1

1) Record the regular journal entry
2) Post
3) Trial balance preparation
4) Record adjusting journal entries
5)Worksheet preparation
6) Adjusted trial balance preparation
7) Statement preparation
8) Record the closing entries
9) Post closing trial balance
10) Reversing entries.

Question 2

What order are the statements created in the accounting cycle?

Answer 2

1) Statement of income
2) Statement of retained earnings / statement of changes in equity.
3) Statement of financial position
4) Statement of cash flows.

Question 3

What is posting?

Answer 3

Transferring the recorded journal entry into the general ledger.

Question 4

What is the subsidiary ledger?

Answer 4

These are the ledgers that provide details to the various ledger accounts.

Question 5

What are the different types of subsidiary ledgers?

Answer 5

Accounts receivable, accounts payable, inventory, and employees

Question 6

What is the general ledger?

Answer 6

The general ledger collects all of the assets, liabilities, expenses, revenues, and shareholders accounts.

Question 7

What is the journal?

Answer 7

The book of original entry where transactions and other events are initially recorded.

Question 8

What are the five main different types of journals?

Answer 8

Sales, purchases, cash receipts, payments, and payroll