Bookkeeping Journal Flashcards

What does it mean to 'post' a journal entry?

Answer: Transfer journal entry amounts to the general ledger accounts

Posting is the process of transferring the debit and credit amounts from the journal to the corresponding general ledger accounts.

A reversing entry is typically made on:

Answer: The first day of the new accounting period

Reversing entries are made on the first day of the new period to automatically cancel accrual adjustments made at period-end.

If a $500 credit sale is incorrectly recorded as a $5,000 credit sale, what correcting entry is needed?

Answer: Debit Sales Revenue $4,500; Credit Accounts Receivable $4,500

To correct an overstatement, debit (reduce) Sales Revenue and credit (reduce) Accounts Receivable by the difference of $4,500.

Which special journal is used to record all sales of merchandise on credit?

Answer: Sales Journal

The sales journal is a special journal dedicated to recording all credit sales of merchandise to customers.

A prepaid insurance payment of $1,200 for 12 months is recorded. After one month, the adjusting entry would be:

Answer: Debit Insurance Expense $100; Credit Prepaid Insurance $100

Each month, $100 of prepaid insurance expires and becomes an expense ($1,200 ÷ 12), reducing the prepaid asset and recognizing the expense.

What is the normal balance of the Accounts Receivable account?

Answer: Debit

Accounts Receivable is an asset account, and all asset accounts carry a normal debit balance.

A business receives a $2,000 advance payment from a customer. The correct journal entry is:

Answer: Debit Cash $2,000; Credit Unearned Revenue $2,000

Cash received before services are rendered creates a liability (Unearned Revenue) because the business still owes the customer the service.