Bookkeeping & General Ledger Flashcards

Which of the following transactions would be recorded in the cash receipts journal?

Answer: Collection of an account receivable

The cash receipts journal records all transactions involving the receipt of cash, including collections on account.

The concept of materiality in bookkeeping means:

Answer: Insignificant items may be treated in the most expedient manner if the misstatement would not affect decisions

Materiality allows accountants to use practical shortcuts for items so small that recording them precisely would not affect financial statement users' decisions.

Outstanding checks on a bank reconciliation are:

Answer: Subtracted from the bank statement balance

Outstanding checks have been recorded in the company's books but have not yet cleared the bank, so they are deducted from the bank statement balance.

Which accounting concept requires that the same accounting methods be applied from one period to the next?

Answer: Consistency

The consistency principle requires that a company use the same accounting methods across periods so financial statements are comparable over time.

When a petty cash fund is replenished, the journal entry includes:

Answer: Debit various expense accounts, Credit Cash

Replenishing petty cash requires debiting the various expense accounts for disbursements made and crediting Cash to restore the fund to its established level.

A bookkeeper posts a $1,500 debit to Equipment instead of a $1,500 debit to Supplies. Which error type is this?

Answer: Error of commission

An error of commission involves posting the correct amount to the correct side (debit) but to the wrong account.

Which of the following would cause the adjusted trial balance to be out of balance?

Answer: A transaction is recorded with a $900 debit and a $90 credit due to a transposition

Recording unequal debit and credit amounts (e.g., $900 debit vs. $90 credit) violates the double-entry rule and will cause the trial balance to be out of balance.