CPB / BookKeeping Bookkeeping Cycle 2

Question 1

Which step in the bookkeeping cycle immediately follows posting journal entries to the ledger?

Accepted Answer

Preparing the trial balance

Answer

After posting to the ledger, the next step is preparing an unadjusted trial balance to verify debits equal credits.

Question 2

A company pays $12,000 for a one-year insurance policy on July 1. What is the adjusting entry on December 31?

Accepted Answer

Debit Insurance Expense $6,000; Credit Prepaid Insurance $6,000

Answer

Six months of coverage has expired ($12,000 × 6/12 = $6,000), so Insurance Expense is debited and Prepaid Insurance is credited.

Question 3

Which accounts are closed at the end of the accounting period?

Accepted Answer

Revenue, expenses, and dividends

Answer

Temporary accounts — revenues, expenses, and dividends — are closed to Retained Earnings at period end.

Question 4

What does a post-closing trial balance verify?

Accepted Answer

Only permanent accounts remain open with equal debits and credits

Answer

The post-closing trial balance confirms that only balance sheet (permanent) accounts remain and total debits equal total credits.

Question 5

Accrued salaries of $3,000 are unpaid at period end. Which adjusting entry is correct?

Accepted Answer

Debit Salaries Expense $3,000; Credit Salaries Payable $3,000

Answer

Accrued salaries are recorded by debiting the expense and crediting the liability (Salaries Payable) to match the period incurred.

CPB / BookKeeping Practice Test