CPB / BookKeeping Bookkeeping Journal 4 — Questions and Answers
Question 1: Which of the following transactions would be recorded in the cash receipts journal?
- Collection of an accounts receivable balance (Correct answer)
- Purchase of office supplies on credit
- Payment of rent by check
- Sale of merchandise on account
Correct answer: Collection of an accounts receivable balance
The cash receipts journal records all incoming cash, including collections from customers who previously bought on credit.
Question 2: What is the effect of debiting the Unearned Revenue account?
- It decreases a liability and is recorded when revenue is earned (Correct answer)
- It increases a liability
- It increases an asset
- It decreases an expense
Correct answer: It decreases a liability and is recorded when revenue is earned
Debiting Unearned Revenue reduces the liability as the business fulfills its obligation and recognizes the earned revenue.
Question 3: A $150 bank service charge appears on the bank statement but not in the company's books. The correcting journal entry is:
- Debit Bank Service Charge Expense $150; Credit Cash $150 (Correct answer)
- Debit Cash $150; Credit Bank Service Charge Expense $150
- Debit Accounts Payable $150; Credit Cash $150
- No entry needed
Correct answer: Debit Bank Service Charge Expense $150; Credit Cash $150
Bank charges reduce the company's cash balance, so an expense is recognized and cash is credited to reflect the reduction.
Question 4: When depreciation is recorded, which accounts are affected?
- Depreciation Expense is debited; Accumulated Depreciation is credited (Correct answer)
- Asset account is debited; Depreciation Expense is credited
- Accumulated Depreciation is debited; Cash is credited
- Depreciation Expense is debited; Asset account is credited
Correct answer: Depreciation Expense is debited; Accumulated Depreciation is credited
Depreciation increases an expense account and increases a contra-asset account (Accumulated Depreciation), not the asset itself.
Question 5: Which of the following is an example of a simple journal entry?
- Debit Cash $500; Credit Service Revenue $500 (Correct answer)
- Debit Cash $300; Credit Service Revenue $200; Credit Unearned Revenue $100
- Debit Equipment $1,000; Credit Cash $600; Credit Notes Payable $400
- Debit Salaries $800; Credit Cash $700; Credit Taxes Payable $100
Correct answer: Debit Cash $500; Credit Service Revenue $500
A simple journal entry involves exactly two accounts — one debit and one credit — as opposed to a compound entry with multiple accounts.
Question 6: The Purchases Journal is used to record purchases of:
- Merchandise inventory on credit (Correct answer)
- All assets for cash
- Office supplies for cash
- Equipment for cash or credit
Correct answer: Merchandise inventory on credit
The purchases journal is a special journal specifically for recording merchandise bought on credit from suppliers.
Question 7: What does a credit entry to the Notes Payable account indicate?
- The business has borrowed money and increased its debt (Correct answer)
- The business has repaid a loan
- Interest expense has been recorded
- Cash has been received from a customer
Correct answer: The business has borrowed money and increased its debt
Crediting Notes Payable increases the liability, indicating the business has taken on new debt by signing a promissory note.
CPB / BookKeeping Bookkeeping Journal 4
Which of the following transactions would be recorded in the cash receipts journal?