CPB / BookKeeping Journalizing and Posting Transactions 5 — Questions and Answers
Question 1: When a previously written-off bad debt is unexpectedly collected, the bookkeeper must first:
- Credit Cash directly to revenue
- Reinstate the account receivable with a reversing entry, then record the cash receipt (Correct answer)
- Debit the bad debt expense account
- Write a memo only — no journal entry needed
Correct answer: Reinstate the account receivable with a reversing entry, then record the cash receipt
The correct procedure reinstates the receivable by reversing the original write-off, then records the cash collection separately to maintain a complete audit trail.
Question 2: The process of transferring debits and credits from the journal to the appropriate ledger accounts is called:
- Journalizing
- Balancing
- Posting (Correct answer)
- Closing
Correct answer: Posting
Posting is the process of copying journal entry information into the corresponding accounts in the general ledger.
Question 3: Which of the following transactions increases both an asset and a liability?
- Owner invests cash into the business
- Business pays cash for office supplies
- Business purchases equipment on account (Correct answer)
- Business collects cash from a customer on account
Correct answer: Business purchases equipment on account
Purchasing equipment on account increases the Equipment asset and simultaneously increases Accounts Payable, a liability.
Question 4: A slide error in bookkeeping means that:
- A number was written with digits reversed
- A decimal point was moved incorrectly (e.g., $500 entered as $5,000) (Correct answer)
- An entry was posted to the wrong side of an account
- Two accounts were accidentally combined
Correct answer: A decimal point was moved incorrectly (e.g., $500 entered as $5,000)
A slide error occurs when the decimal point is misplaced, such as recording $500 as $5,000, and the difference is always divisible by 9.
Question 5: In a T-account, the left side always represents:
- Credits for all account types
- Increases for liability accounts
- The debit side (Correct answer)
- The normal balance for revenue accounts
Correct answer: The debit side
By convention, the left side of every T-account is always the debit side, regardless of whether debits increase or decrease that particular account.
Question 6: A bookkeeper accidentally posts a $150 debit to Supplies instead of Office Equipment. This is an example of an error of:
- Omission
- Commission (wrong account) (Correct answer)
- Principle
- Original entry
Correct answer: Commission (wrong account)
An error of commission occurs when the correct amount is recorded but posted to the wrong account of the same type.
Question 7: After all posting is complete, the next step in the accounting cycle is to:
- Prepare the chart of accounts
- Record adjusting entries in the journal
- Prepare an unadjusted trial balance (Correct answer)
- Close revenue and expense accounts
Correct answer: Prepare an unadjusted trial balance
After posting, the bookkeeper prepares an unadjusted trial balance to verify that total debits equal total credits before making adjustments.
CPB / BookKeeping Journalizing and Posting Transactions 5
When a previously written-off bad debt is unexpectedly collected, the bookkeeper must first: