Bookkeeping Cycle Flashcards

Which document is used as the source for journalizing a credit sale transaction?

Answer: Sales invoice

A sales invoice is the source document that supports recording a credit sale in the journal.

Equipment costing $50,000 with a $5,000 salvage value is depreciated over 5 years using straight-line. What is the annual depreciation?

Answer: $9,000

Annual depreciation = ($50,000 − $5,000) ÷ 5 years = $9,000 per year.

When a business collects cash in advance for services not yet performed, it records:

Answer: A debit to Cash and a credit to Unearned Revenue

Cash received before services are performed creates a liability (Unearned Revenue) until the service is delivered.

The ledger account that accumulates depreciation over an asset's life is called:

Answer: Accumulated Depreciation

Accumulated Depreciation is a contra-asset account that grows each period as depreciation expense is recorded.

Which trial balance is prepared AFTER adjusting entries but BEFORE financial statements?

Answer: Adjusted trial balance

The adjusted trial balance reflects all end-of-period adjustments and is used to prepare the financial statements.

A bookkeeper debits Accounts Receivable and credits Service Revenue when a service is performed on credit. This step represents:

Answer: Journalizing the transaction

Recording a transaction with its debit and credit in the journal is called journalizing.

If supplies on hand at year-end are $400 but the Supplies account shows $1,100, the adjusting entry credits Supplies for:

Answer: $700

Supplies used = $1,100 − $400 = $700; Supplies Expense is debited $700 and Supplies is credited $700.