CPB / BookKeeping Bookkeeping Journal 2

Question 1

A company purchases $3,000 of inventory on account. Which journal entry is correct?

Accepted Answer

Debit Inventory $3,000; Credit Accounts Payable $3,000

Answer

Debit Accounts Payable $3,000; Credit Inventory $3,000

Answer

Debit Cash $3,000; Credit Inventory $3,000

Answer

Debit Inventory $3,000; Credit Cash $3,000

Question 2

What is the purpose of a compound journal entry?

Accepted Answer

To record a transaction involving more than two accounts

Answer

To correct a prior period error

Answer

To record only cash transactions

Answer

To summarize monthly totals

Question 3

Which journal would be used to record the return of merchandise previously purchased on credit?

Accepted Answer

Purchases Returns and Allowances Journal

Answer

Sales Journal

Answer

Cash Receipts Journal

Answer

General Journal

Question 4

When a business pays its utility bill with a check, which journal records this transaction?

Accepted Answer

Cash Disbursements Journal

Answer

Cash Receipts Journal

Answer

Sales Journal

Answer

Purchases Journal

Question 5

A journal entry shows a debit to Salaries Expense and a credit to Salaries Payable. What does this represent?

Accepted Answer

Accrued salaries earned but not yet paid

Answer

Salaries paid in cash to employees

Answer

Prepaid salary expense

Answer

Reversal of a prior salary entry

Question 6

In the general journal, what information is recorded in the 'Description' or 'Narration' column?

Accepted Answer

A brief explanation of the transaction

Answer

The account balance after posting

Answer

The ledger page number

Answer

The transaction amount in words

Question 7

Which entry records the owner withdrawing cash from the business for personal use?

Accepted Answer

Debit Owner's Drawings; Credit Cash

Answer

Debit Cash; Credit Owner's Equity

Answer

Debit Owner's Equity; Credit Revenue

Answer

Debit Expense; Credit Cash