Accounting Chapter 7 Definitions Quiz

Explanation
The correct answer is "account title" because it refers to the name of the item for which an account is prepared and is entered at the top of the page. "Accounting title" is not a commonly used term in accounting and does not accurately describe the purpose of entering the name of the item on the page.

Explanation
A balance column account is the most commonly used type of account that has three columns: one for debit, one for credit, and one for the balance amount. This type of account allows for easy tracking and calculation of the account balance. It is also known as a three-column account.

Explanation
A correcting journal entry is an accounting entry made to rectify the effect of an error. It is used to correct mistakes made in previous journal entries, such as recording an incorrect amount or posting to the wrong account. By making a correcting journal entry, the error is reversed and the correct information is recorded, ensuring that the financial statements are accurate and reliable. This entry helps to maintain the integrity of the accounting records and provides a clear audit trail of the correction made.

Explanation
Cross-referencing is the process of linking related information in different parts of a document or system. In this context, putting the account number in the journal and the journal page in the p.r section involves cross-referencing. By doing so, the account number and journal page are connected, allowing for easy retrieval and reference of information.

Explanation
The term "forwarding" refers to the process of continuing an account or journal on a new page by carrying forward all the relevant information from the completed page. This means that when a page is filled with information, instead of starting a new page from scratch, the relevant information is transferred or forwarded to the next page to ensure continuity and completeness of the account or journal.

Explanation
The correct answer is "opening an account" or "opening account". This refers to the process of creating a new account in a ledger, typically in the context of financial or banking systems. It involves gathering necessary information, verifying the identity of the account holder, and establishing the account details such as account number, account type, and initial balance. This step is essential for individuals or businesses to start using a new account for various transactions and record-keeping purposes.

Explanation
Posting is the process of transferring the accounting entries from the journal to the ledger. It involves recording the debits and credits of each transaction in the appropriate accounts in the ledger. This step is essential for maintaining accurate and up-to-date financial records. By posting the journal entries to the ledger, businesses can track their financial transactions and prepare financial statements. The ledger serves as a central repository of all the accounts, providing a clear overview of the company's financial position. Overall, posting is a crucial step in the accounting cycle that ensures the accuracy and integrity of the financial information.

Explanation
A transposition error refers to a mistake that occurs when digits are accidentally swapped or interchanged when transferring figures from one place to another. For example, if the number 1234 is incorrectly written as 1324 or 1243. The key characteristic of transposition errors is that the difference between the original number and the incorrect number is always divisible by 9.