CPB / BookKeeping Journalizing and Posting Transactions 4

Question 1

If a $200 utility bill is paid in cash but recorded as a debit to Accounts Payable and credit to Cash, the error will cause:

Accepted Answer

Accounts Payable to be overstated and Utilities Expense understated

Answer

Debiting Accounts Payable instead of Utilities Expense leaves Accounts Payable incorrectly reduced and Utilities Expense not recorded at all.

Question 2

A transposition error occurs when:

Accepted Answer

Digits within a number are reversed (e.g., $459 written as $495)

Answer

A transposition error reverses the order of digits in a number, such as writing $459 as $495, and is often detectable because the difference is divisible by 9.

Question 3

When equipment worth $5,000 is purchased by paying $2,000 cash and financing the rest on account, the journal entry includes:

Accepted Answer

Debit Equipment $5,000, Credit Cash $2,000 and Credit Accounts Payable $3,000

Answer

The full cost of the equipment ($5,000) is debited, with partial payment from Cash ($2,000) and the balance owed to Accounts Payable ($3,000).

Question 4

The folio column in a general journal serves what purpose?

Accepted Answer

Contains the account numbers used as cross-references to the ledger

Answer

The folio (or posting reference) column in the journal holds ledger account numbers, linking each journal line to its ledger account.

Question 5

A business receives $600 in advance for services not yet performed. This is recorded as:

Accepted Answer

Debit Cash, Credit Unearned Revenue

Answer

Cash received before earning it creates Unearned Revenue, a liability, because the business still owes the service to the customer.

CPB / BookKeeping Practice Test

CPB / BookKeeping Practice Test

CPB / BookKeeping Journalizing and Posting Transactions 4