2 UNIT 2
Sure, here are 15 multiple-choice questions (MCQs) covering the specified topics:
Journal Importance and Utility, Classification of Accounts, Journalizing of Transactions:
-
What is the primary purpose of a journal in accounting? a) To provide a summary of financial transactions b) To communicate financial information to external stakeholders c) To record transactions in chronological order d) To prepare financial statements Answer: c) To record transactions in chronological order
-
Which of the following is NOT a classification of accounts? a) Assets b) Liabilities c) Equity d) Entries Answer: d) Entries
-
When a business purchases inventory on credit, which account is debited in the journal entry? a) Inventory b) Accounts Payable c) Cash d) Accounts Receivable Answer: a) Inventory
-
Which of the following represents amounts owed to suppliers for goods or services purchased on credit? a) Accounts Receivable b) Equity c) Accounts Payable d) Prepaid Expenses Answer: c) Accounts Payable
-
What type of account is “Salaries Expense”? a) Asset b) Liability c) Equity d) Expense Answer: d) Expense
Ledger Meaning and Utility, Posting of Journal Entries to the Ledgers, Closing the Ledger:
-
What is the purpose of a ledger in accounting? a) To provide a summary of financial transactions b) To record transactions in chronological order c) To record transactions in separate accounts d) To communicate financial information to external stakeholders Answer: c) To record transactions in separate accounts
-
Which of the following statements about posting journal entries to the ledger is TRUE? a) Posting involves transferring entries from the journal to the trial balance. b) Posting helps in summarizing financial transactions. c) Posting is done in chronological order. d) Posting involves transferring entries from the journal to the respective accounts in the ledger. Answer: d) Posting involves transferring entries from the journal to the respective accounts in the ledger.
-
Closing the ledger at the end of the accounting period involves: a) Deleting all ledger accounts b) Carrying forward all account balances to the next period c) Transferring balances from income and expense accounts to the owner’s equity account d) Recording adjusting entries Answer: c) Transferring balances from income and expense accounts to the owner’s equity account
-
Which of the following accounts would be closed at the end of the accounting period? a) Cash b) Prepaid Rent c) Accumulated Depreciation d) Service Revenue Answer: d) Service Revenue
-
The closing process serves to: a) Transfer balances from income and expense accounts to the balance sheet b) Update the ledger accounts c) Prepare financial statements d) Close the business operations Answer: a) Transfer balances from income and expense accounts to the balance sheet
-
What is the purpose of the balance column in a ledger account? a) To record the transactions chronologically b) To calculate the account balance c) To indicate whether the account is balanced d) To provide a summary of transactions Answer: b) To calculate the account balance
-
When closing the ledger, which account would be debited to transfer the balance of revenue accounts? a) Owner’s Capital b) Income Summary c) Retained Earnings d) Service Revenue Answer: b) Income Summary
-
Which of the following is an example of an income statement account? a) Accounts Payable b) Owner’s Equity c) Rent Expense d) Notes Payable Answer: c) Rent Expense
-
After posting journal entries to the ledger, the sum of all debit balances should equal: a) Total assets b) Total liabilities c) Total equity d) Total credits Answer: d) Total credits
-
What is the purpose of closing entries in the ledger? a) To adjust asset and liability accounts b) To transfer net income or loss to the owner’s equity account c) To record daily transactions d) To prepare financial statements Answer: b) To transfer net income or loss to the owner’s equity account
These questions cover the importance and utility of journals, classification of accounts, journalizing of transactions, ledger meaning and utility, posting of journal entries to the ledgers, and closing the ledger in accounting.