Journalizing and Posting Transactions Flashcards

Which of the following describes the process of transferring information from the journal to the general ledger?

Answer: Posting

Posting is the process in the accounting cycle where entries are transferred from the journal, where they are originally recorded, to the general ledger, which summarizes transactions by account. Journalizing is the initial act of recording the transaction in a journal.

A small business purchases $500 of office supplies on credit. Which is the correct journal entry to record this transaction?

Answer: Debit Office Supplies $500, Credit Accounts Payable $500

The purchase of office supplies increases an asset account (Office Supplies), which requires a debit. Since the purchase was on credit, it also increases a liability account (Accounts Payable), which requires a credit. This adheres to the rules of double-entry bookkeeping.

The primary purpose of a journal in accounting is to:

Answer: Provide a chronological record of all business transactions.

The journal, sometimes called the book of original entry, is used to record all transactions in chronological order as they occur. The general ledger summarizes account balances, and the balance sheet reports financial position.

An error where a transaction is recorded in the wrong account, such as debiting an expense instead of an asset, is known as an error of:

Answer: Principle

An error of principle occurs when a transaction is recorded using the wrong accounting treatment, violating fundamental accounting principles, such as recording a capital expenditure (an asset) as a revenue expenditure (an expense). An error of commission is when the correct account type is used but the wrong specific account is chosen, or an amount is entered incorrectly. An error of omission is when a transaction is not recorded at all. A transposition error involves mixing up the order of digits.

A bookkeeper for XYZ Corp. receives a $2,000 payment from a customer for services previously rendered and invoiced. The journal entry to record this cash receipt would be:

Answer: Debit Cash, Credit Accounts Receivable

When the cash is received, the Cash account (an asset) increases, which requires a debit. Since the services were already rendered and invoiced, the payment reduces the amount the customer owes, so the Accounts Receivable account (also an asset) decreases, which requires a credit. Sales Revenue was already recognized when the service was originally invoiced.

Which of the following is the correct sequence of steps in the accounting cycle?

Answer: Journalize Transactions, Post to Ledger, Prepare Trial Balance

The accounting cycle begins with identifying and analyzing transactions, which are then recorded in a journal (journalizing). Next, these journal entries are transferred to the general ledger (posting). After posting, an unadjusted trial balance is prepared to check if total debits equal total credits.