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

Purchasing inventory on account increases the asset Inventory (debit) and creates a liability Accounts Payable (credit).

Question 2

What is the purpose of a compound journal entry?

Accepted Answer

To record a transaction involving more than two accounts

Answer

A compound journal entry records a single transaction that affects more than two accounts while keeping debits equal to credits.

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

Purchases returns and allowances have their own special journal to track reductions in amounts owed to suppliers.

Question 4

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

Accepted Answer

Cash Disbursements Journal

Answer

The cash disbursements journal records all outgoing cash payments, including checks written for expenses.

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

Debiting Salaries Expense and crediting Salaries Payable records wages earned by employees that have not yet been paid in cash.

CPB / BookKeeping Practice Test