Financial Recordkeeping
Pre-Test Questions
Course Introduction
Financial Recordkeeping introduces students to the fundamental principles and practices of maintaining accurate financial records for businesses and organizations. The course covers essential topics such as double-entry bookkeeping, the preparation and management of journals and ledgers, trial balances, and basic financial statements. Students will gain practical skills in recording transactions, managing accounts payable and receivable, and reconciling bank statements. Emphasis is placed on the use of industry-standard recordkeeping systems and software, compliance with legal and ethical standards, and the importance of accuracy and confidentiality in handling financial information. This course provides a solid foundation for further studies in accounting and finance or for entry-level positions in financial administration.
Recommended Textbook
College Accounting Chapters 1 9 22nd Edition by James A. Heintz
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Page 2
Chapter 1: Introduction to Accounting
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Sample Questions
Q1) ____________________ involves the application of standard review and testing procedures to be certain that proper accounting policies and practices have been followed.
Answer: Auditing
Q2) The principal accounting officer of a company is called a public accountant.
A)True
B)False Answer: False
Q3) Stockholders may have very little influence on business decisions.
A)True
B)False
Answer: True
Q4) A business that makes a product to sell is called a(n)____________________ business.
Answer: manufacturing
Q5) Entering financial information about events affecting the company into the accounting system is called ____________________. Answer: recording
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Chapter 2: Analyzing Transactions: the Accounting Equation
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Sample Questions
Q1) The financial statement that should be completed first is the A) balance sheet.
B) statement of financial position.
C) statement of financial condition.
D) income statement.
Answer: D
Q2) An accounts payable is an unwritten promise to pay a supplier for assets purchased or services rendered.
A)True
B)False
Answer: True
Q3) Since insurance lasts for several months,it is recorded as owner's equity.
A)True
B)False
Answer: False
Q4) ____________________ is the amount by which business assets exceed the business liabilities.
Answer: Owner's equity
4
Q5) Amounts owed to the business by its customers are called
Answer: accounts receivable
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Page 5
Chapter 3: The Double-Entry Framework
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Sample Questions
Q1) The balance sheet
A) is a list of all accounts showing the title and balance of each account.
B) is used as an aid in preparing the trial balance and income statement.
C) is for a period of time.
D) shows that assets equal liabilities plus owner's equity.
Answer: D
Q2) A T account has which of the following three major parts?
A) a title,a debit side,and a credit side
B) a title,a current date,and a balance
C) a debit side,a credit side,and a total column
D) a debit side,a credit side,and a balance
Answer: A
Q3) A purchase of an asset on account
A) increases cash.
B) decreases owner's equity.
C) increases assets.
D) decreases expenses.
Answer: C
Q4) The ____________________ balance is on the side that increases an account.
Answer: normal
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Chapter 4: Journalizing and Posting Transactions
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Sample Questions
Q1) The ledger is a reliable source of information only when all of the transactions entered in the journal have been posted.
A)True
B)False
Q2) Source documents begin the process of entering transactions in the accounting system.
A)True
B)False
Q3) The chart of accounts includes assets,liabilities,and owner's equity accounts only.
A)True
B)False
Q4) All transactions must be posted before preparing a trial balance.
A)True
B)False
Q5) A list of all accounts (account titles)used by a business is called a(n)____________________.
Q6) The act of entering transactions in the journal is known as ____________________.
Page 7
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Chapter 5: Adjusting Entries and the Work Sheet
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Sample Questions
Q1) Adjusting entries does not always affect both the income statement and the balance sheet.
A)True
B)False
Q2) It is not necessary to post adjusting entries.
A)True
B)False
Q3) The owner's capital account in the last two columns of the work sheet is not up-to-date because it does not yet include net income and withdrawals of the current period.
A)True
B)False
Q4) Under the modified cash basis of accounting,cash payments for assets with lives longer than one accounting period (buildings,equipment,insurance,etc.)are recorded as assets and adjustments are made each period.
A)True
B)False
Q5) The difference between the asset account and the contra-asset account is known as the ____________________.
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Chapter 6: Financial Statements and the Closing Process
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Sample Questions
Q1) (Appendix)A company receives cash from a bank loan.This activity is classified as A) operating.
B) investing.
C) financing.
D) borrowing.
Q2) The journal entry to close the income summary account (showing a profit)includes A) debiting the drawing account and crediting Income Summary. B) debiting Income Summary and crediting the drawing account.
C) debiting the owner's capital account and crediting Income Summary.
D) debiting Income Summary and crediting the owner's capital account.
Q3) To close a revenue account with a credit balance,debit the account for its balance and credit the income summary account.
A)True B)False
Q4) Adjusting entries are recorded and posted after closing entries. A)True B)False
Q5) The ____________________ balance sheet shows the liabilities and owner's equity sections below the asset section.
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Chapter 7: Accounting for Cash
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Q1) A cash shortage is entered as a debit to Cash Short and Over and a credit to Cash.
A)True
B)False
Q2) When a check is written to replenish the petty cash fund,it is entered in the journal by debiting the proper accounts indicated in the Distributions columns of the petty cash record and by crediting Cash Over and Short.
A)True
B)False
Q3) A statement of account issued by a bank to each depositor once a month is known as a(n)____________________.
Q4) ____________________ use computers rather than paper checks to complete transactions with the bank.
Q5) On a bank reconciliation,deposits that were not entered by the bank before the bank statement was prepared are known as
A) NSF deposits.
B) restrictive deposits.
C) deposits in transit.
D) unrecorded deposits.
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Chapter 8: Payroll Accounting: Employee Earnings and Deductions
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Q1) The ____________________ requires employers to pay overtime at 1 1/2 times the regular rate to any hourly employee who works over 40 hours in a week.
Q2) Every individual who performs services for a business is considered to be an employee.
A)True
B)False
Q3) When a single-check for payroll is prepared and deposited into a special payroll bank account,which of the following entries is made to record the deposit?
A) debit Wages and Salaries Expense; credit Cash
B) debit Payroll Cash; credit Cash
C) debit Cash; credit Payroll Expense
D) debit Cash; credit Wages and Salaries Expense
Q4) Plastic cards or badges encoded with basic employee data are now being used in computer-based time keeping systems.
A)True
B)False
Q5) ____________________ provides pensions and disability benefits.
Page 11
Q6) ____________________ are compensation for skilled or unskilled labor.
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Chapter 9: Payroll Accounting: Employer Taxes and Reports
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Q1) The date by which federal income tax withholding,Social Security,and Medicare taxes must be paid depends on the amount of these taxes.
A)True
B)False
Q2) Each employer must have an Employer Identification Number (EIN)to show on all tax reports.
A)True B)False
Q3) Self-employed individuals can be viewed as both employer and employee.
A)True B)False
Q4) Employer payroll taxes may be deposited either through the Electronic Federal Tax Payment System or by using ____________________.
Q5) To journalize the employer's payroll taxes,we need to credit all of the following accounts EXCEPT
A) Payroll Taxes Expense.
B) Social Security Tax Payable.
C) Medicare Tax Payable.
D) FUTA Tax Payable.
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Chapter 10: Module Accounting For A Professional Service
Business The Combination Journal
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Q1) Each entry is posted individually from the General Debit column of the combination journal to the proper general ledger account.
A)True
B)False
Q2) From the combination journal,the total of the Cash Debit column is posted as one amount to the credit side of the Cash account and the total of the Cash Credit column is posted as one amount to the debit side of the Cash account.
A)True
B)False
Q3) Columns in journals for frequently used accounts.
A)accrual basis of accounting
B)combination journal
C)Description column
D)General Credit column
E)General Debit column
F)modified cash basis
G)Posting Reference column
H)special columns
Q4) A(n)____________________ is a journal with special and general columns.
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