Chapter 3 Quiz (Accounting)

To prove a journal page, it is necessary to ensure that the total debits recorded on the page are equal to the total credits. This is because in accounting, debits and credits must always balance in order to maintain accurate financial records. By verifying that the debits and credits are equal, one can confirm the accuracy of the journal page and ensure that all transactions have been properly recorded. Therefore, the statement is true.

A general journal is a journal that has two amount columns in which all kinds of entries can be recorded. It is a versatile journal that can be used to record various types of transactions, including sales, purchases, expenses, and other financial activities. The two amount columns allow for the recording of both debit and credit entries, making it a comprehensive tool for maintaining accurate financial records.

Transactions are recorded in a journal in chronological order to maintain a clear and organized record of the sequence in which they occurred. This allows for easy identification and retrieval of specific transactions based on their date and time. By recording transactions in this order, it becomes easier to track the flow of financial information and analyze the financial activities of a business over a specific period of time.

Double-entry accounting is a system of recording financial transactions that involves making entries in two accounts - one for the debit side and the other for the credit side. This method ensures that the accounting equation (assets = liabilities + equity) remains balanced. Each transaction affects at least two accounts, with one account being debited and another being credited. This system provides a more accurate and reliable way of tracking and analyzing financial transactions compared to single-entry accounting, where only one account is affected per transaction. Special journals and bi-column journals are specific types of accounting records used in double-entry accounting.

Account balances increase on the normal balance side of an account because the normal balance is the side where increases in the account are recorded. For example, in an asset account, such as cash or accounts receivable, increases are recorded on the debit side, which is the normal balance side. In a liability or equity account, such as accounts payable or retained earnings, increases are recorded on the credit side, which is the normal balance side. Therefore, when there is an increase in an account, it is recorded on the normal balance side, leading to an overall increase in the account balance.

A source document is a business paper that provides information for a journal entry. It is used to support and verify the recording of financial transactions in the accounting system. Source documents can include invoices, receipts, checks, purchase orders, and other documents that provide evidence of a transaction. These documents are important for maintaining accurate and reliable financial records and for auditing purposes.

A source document is a business paper that provides information for a journal entry. It is a document that serves as evidence of a transaction or event, such as a sales receipt, purchase invoice, or a memo. These documents contain important details that are used to record the transaction accurately in the accounting records. By using source documents, businesses can ensure the reliability and accuracy of their financial information.

Expenses are recorded as debits, not credits. Expenses represent costs incurred by a business and are considered an decrease to owner's equity. Therefore, they are recorded as debits to reflect the decrease in equity.

A sales invoice is not a form that gives written acknowledgement for cash received. Instead, it is a document that is issued by a seller to a buyer, providing details of a sale transaction, including the products or services sold, the quantity, the price, and any applicable taxes or discounts. It serves as a request for payment from the buyer and is usually used in credit sales, where payment is expected at a later date.

A revenue account represents the income generated by a business through its regular operations. It is a type of nominal account and has a normal credit balance. This means that when revenue is earned, it is recorded as a credit entry in the revenue account. Conversely, expenses and losses are recorded as debit entries in the revenue account. Therefore, the correct answer is False, as a revenue account has a normal credit balance, not a debit balance.

An invoice is a form that provides a detailed description of the goods or services sold, including the quantity and price. It is typically used as a formal request for payment from the seller to the buyer. Unlike a receipt, which is given to the buyer as proof of payment, an invoice is issued before payment is made. Therefore, an invoice is the correct answer to this question.

Errors are corrected in a way that does not cause doubts about what the correct information is. This means that when errors are fixed, it is done in a manner that ensures the correct information is clearly presented and there is no confusion or uncertainty about it. The correction should be done so effectively that nobody can even tell that an error was made in the first place. This ensures that the corrected information is accurate and reliable, without any room for doubt or confusion.

The correct answer is "Check" because a check is a written document that serves as proof of payment. It is typically used to make payments from a bank account and includes details such as the payee's name, the amount being paid, and the date. Unlike an invoice, which is a request for payment, a check is the actual payment itself. Receipts are given to the payer as proof of payment, but they are not the source document for cash payments. Calculator tapes are used to record calculations and are not relevant to cash payments.

When you pay $300.00 cash on account to Supply Depot, you are reducing the amount you owe to Supply Depot. This means you need to debit (reduce) the Accounts Payable--Supply Depot account. At the same time, you are paying with cash, so you need to credit (increase) the Cash account. Therefore, the correct answer is to debit Accounts Payable--Supply Depot for $300.00 and credit Cash for $300.00.

Businesses usually record transactions as soon as they occur in order to prevent getting overloaded. This allows them to maintain an accurate and up-to-date record of their financial activities. However, it is not always possible for businesses to record transactions immediately due to various reasons such as time constraints, volume of transactions, or the need for further verification. Therefore, the statement that businesses always record transactions as soon as they occur is false.