CPB / BookKeeping Journalizing and Posting Transactions 3

Question 1

When posting to the general ledger, the journal page number is recorded in the ledger's posting reference column primarily to:

Accepted Answer

Allow tracing back to the original journal entry

Answer

The journal page reference in the ledger allows an auditor or bookkeeper to trace any ledger entry back to the original journal entry.

Question 2

A business pays $1,200 for six months of prepaid insurance. The correct journal entry is:

Accepted Answer

Debit Prepaid Insurance $1,200, Credit Cash $1,200

Answer

Paying for insurance in advance creates an asset (Prepaid Insurance) that is debited, with Cash credited for the outflow.

Question 3

The normal balance of the Accounts Payable account is a:

Accepted Answer

Credit, because it is a liability account

Answer

Accounts Payable is a liability, and liabilities have normal credit balances that increase with credits.

Question 4

Which sequence correctly describes the accounting cycle flow for journalizing and posting?

Accepted Answer

Analyze transaction → Record in journal → Post to ledger

Answer

The proper sequence is: analyze the transaction, record it in the journal, then post the entry to the appropriate ledger accounts.

Question 5

The owner withdraws $800 cash for personal use. Which account is debited?

Accepted Answer

Drawing (Withdrawals)

Answer

Owner withdrawals are debited to the Drawing account, which is a contra-equity account that reduces owner's equity.

CPB / BookKeeping Practice Test