CPB / BookKeeping Bookkeeping Journal 5 — Questions and Answers
Question 1: A company sells goods worth $800 and collects $300 cash while the rest is on account. The journal entry includes:
- Debit Cash $300; Debit Accounts Receivable $500; Credit Sales Revenue $800 (Correct answer)
- Debit Cash $800; Credit Sales Revenue $800
- Debit Accounts Receivable $800; Credit Sales Revenue $800
- Debit Cash $300; Credit Sales Revenue $300
Correct answer: Debit Cash $300; Debit Accounts Receivable $500; Credit Sales Revenue $800
A partial cash, partial credit sale is a compound entry: cash received goes to Cash, the remainder to Accounts Receivable, and total to Sales Revenue.
Question 2: Which principle requires that expenses be recorded in the same period as the revenues they helped generate?
- Matching principle (Correct answer)
- Revenue recognition principle
- Cost principle
- Full disclosure principle
Correct answer: Matching principle
The matching principle requires expenses to be recorded in the same accounting period as the revenues they helped produce.
Question 3: An accrued expense journal entry at period-end typically includes:
- A debit to an expense account and a credit to a payable account (Correct answer)
- A debit to a payable account and a credit to an expense account
- A debit to cash and a credit to expense
- A debit to prepaid expense and a credit to cash
Correct answer: A debit to an expense account and a credit to a payable account
Accrued expenses are costs incurred but not yet paid, recorded by debiting the expense and crediting the corresponding payable liability.
Question 4: If rent of $1,500 is paid in advance for three months, what is the initial journal entry?
- Debit Prepaid Rent $1,500; Credit Cash $1,500 (Correct answer)
- Debit Rent Expense $1,500; Credit Cash $1,500
- Debit Cash $1,500; Credit Prepaid Rent $1,500
- Debit Rent Expense $500; Credit Prepaid Rent $500
Correct answer: Debit Prepaid Rent $1,500; Credit Cash $1,500
Paying rent in advance creates an asset (Prepaid Rent) because the benefit has not yet been used, reducing cash.
Question 5: Which of the following is NOT a component of a journal entry?
- Account balance after posting (Correct answer)
- Date of the transaction
- Names of accounts affected
- Dollar amounts of debits and credits
Correct answer: Account balance after posting
The account balance after posting belongs in the ledger, not the journal; journal entries contain the date, account names, and debit/credit amounts.
Question 6: A $200 NSF (non-sufficient funds) check returned by the bank should be recorded as:
- Debit Accounts Receivable $200; Credit Cash $200 (Correct answer)
- Debit Cash $200; Credit Accounts Receivable $200
- Debit Bad Debt Expense $200; Credit Cash $200
- No entry required
Correct answer: Debit Accounts Receivable $200; Credit Cash $200
An NSF check reverses the original deposit: cash is reduced (credit) and the customer's receivable is reinstated (debit).
Question 7: What is the correct order of steps in the accounting cycle related to journals?
- Identify transaction → Record in journal → Post to ledger → Prepare trial balance (Correct answer)
- Post to ledger → Record in journal → Identify transaction → Prepare trial balance
- Prepare trial balance → Record in journal → Post to ledger → Identify transaction
- Record in journal → Identify transaction → Prepare trial balance → Post to ledger
Correct answer: Identify transaction → Record in journal → Post to ledger → Prepare trial balance
The accounting cycle begins by identifying transactions, then recording them in the journal, posting to the ledger, and preparing a trial balance to verify accuracy.
CPB / BookKeeping Bookkeeping Journal 5
A company sells goods worth $800 and collects $300 cash while the rest is on account.
The journal entry includes: