Jounal Entries

Question 1

What is a journal entry in accounting?

Answer 1

A journal entry is a record of a business transaction in the accounting system.

Question 2

True or False: Debits always increase asset accounts.

Answer 2

True

Question 3

What are the two main components of a journal entry?

Answer 3

Debits and credits.

Question 4

Fill in the blank: In a journal entry, the total debits must equal ______.

Answer 4

the total credits.

Question 5

What is the normal balance of an asset account?

Answer 5

Debit

Question 6

Which account type is increased by a credit?

Answer 6

Liability and equity accounts.

Question 7

True or False: Revenue accounts have a normal credit balance.

Answer 7

True

Question 8

What does the term ‘double-entry accounting’ mean?

Answer 8

It means that every transaction affects at least two accounts, with equal debits and credits.

Question 9

What is the purpose of journal entries?

Answer 9

To record all financial transactions in chronological order.

Question 10

Multiple Choice: What is the effect of debiting an expense account?

Answer 10

It increases the expense.

Question 11

What is the normal balance for a liability account?

Answer 11

Credit

Question 12

Fill in the blank: A journal entry typically includes the date, accounts affected, amounts, and a brief ______.

Answer 12

description.

Question 13

True or False: A journal entry can have multiple debits and credits.

Answer 13

True

Question 14

What happens to equity when a business earns revenue?

Answer 14

Equity increases.

Question 15

What is the accounting equation?

Answer 15

Assets = Liabilities + Equity.

Question 16

Multiple Choice: Which of the following accounts is NOT increased by a debit?

Answer 16

Accounts Payable

Question 17

What type of account is ‘Cash’?

Answer 17

Asset account.

Question 18

Fill in the blank: When a business pays a bill, it will ______ the expense account and ______ the cash account.

Answer 18

debit; credit.

Question 19

True or False: A journal entry must always include a date.

Answer 19

True

Question 20

What is the role of the general ledger in accounting?

Answer 20

To summarize all journal entries by account.

Question 21

What is a compound journal entry?

Answer 21

A journal entry that involves more than two accounts.

Question 22

Multiple Choice: Which of the following is an example of a liability?

Answer 22

Accounts Payable

Question 23

What do you call a journal entry that corrects a previous entry?

Answer 23

Adjusting journal entry.

Question 24

Fill in the blank: The ______ is used to track all transactions related to a specific account.

Answer 24

ledger.

Question 25

True or False: All transactions in accounting must be documented with a source document.

Answer 25

True

Question 26

What is the effect of a debit on a revenue account?

Answer 26

It decreases the revenue.

Question 27

What does 'posting' refer to in accounting?

Answer 27

Transferring journal entries to the ledger accounts.

Question 28

Multiple Choice: Which type of account is 'Owner's Equity'?

Answer 28

Equity account.

Question 29

What is a transaction?

Answer 29

An economic event that affects the financial position of a business.

Question 30

Fill in the blank: Accounts that increase with a credit include ______ and ______.

Answer 30

revenues; liabilities.

Question 31

True or False: Asset accounts are decreased by credits.

Answer 31

True

Question 32

What is the purpose of a trial balance?

Answer 32

To ensure that total debits equal total credits.

Question 33

What is the difference between a journal and a ledger?

Answer 33

A journal records transactions chronologically, while a ledger organizes them by account.