CPB / BookKeeping Bookkeeping Journal 4

Question 1

Which of the following transactions would be recorded in the cash receipts journal?

Accepted Answer

Collection of an accounts receivable balance

Answer

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?

Accepted Answer

It decreases a liability and is recorded when revenue is earned

Answer

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:

Accepted Answer

Debit Bank Service Charge Expense $150; Credit Cash $150

Answer

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?

Accepted Answer

Depreciation Expense is debited; Accumulated Depreciation is credited

Answer

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?

Accepted Answer

Debit Cash $500; Credit Service Revenue $500

Answer

A simple journal entry involves exactly two accounts — one debit and one credit — as opposed to a compound entry with multiple accounts.

CPB / BookKeeping Practice Test