CPB / BookKeeping Adjusting Entries and Reconciliations 5

Question 1

Which of the following errors would be revealed by a trial balance?

Accepted Answer

A debit posted as $540 instead of $450 with no matching credit correction

Answer

A transposition error where debit and credit totals differ will cause the trial balance to be out of balance.

Question 2

The adjusting entry to record earned revenue that was previously classified as unearned will:

Accepted Answer

Decrease liabilities and increase revenue

Answer

Converting unearned revenue to earned revenue reduces the liability (Unearned Revenue) and increases revenue.

Question 3

A bank statement shows a credit memo for $750 representing a note collected by the bank. What entry does the company record?

Accepted Answer

Debit Cash $750; Credit Notes Receivable $750

Answer

The bank collected the note and deposited the funds, increasing cash and eliminating the receivable.

Question 4

Reversing entries are typically made on:

Accepted Answer

The first day of the next accounting period

Answer

Reversing entries are dated the first day of the new period to simplify recording of the subsequent cash transaction.

Question 5

Which of the following best describes the matching principle as it applies to adjusting entries?

Accepted Answer

Expenses should be recognized in the same period as the revenue they help generate

Answer

The matching principle requires expenses to be recorded in the period that the associated revenue is recognized.

CPB / BookKeeping Practice Test