FAC1601 ASSIGNMENT 2 STUDY GUIDE
2026 COMPLETE ANSWERS AND
CORRECT SOLUTIONS || 100%
GUARANTEED PASS <RECENT
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Category 1: The Accounting Cycle and Source Documents
1. What is the first step in the accounting cycle?
A. Preparing financial statements
B. Identifying and analyzing business transactions
C. Posting to the ledger
D. Recording adjusting entries
2. A sales invoice is a source document that provides evidence of:
A. A cash purchase
B. A credit sale
C. A cash receipt
D. A payment to a supplier
3. The primary purpose of the ledger is to:
A. Record transactions in chronological order
B. Prepare the trial balance
C. Provide a summary of all transactions for each account
D. Journalize adjusting entries
4. The correct sequence of the accounting cycle is:
A. Journal -> Ledger -> Trial Balance -> Financial Statements
B. Financial Statements -> Trial Balance -> Ledger -> Journal
C. Ledger -> Journal -> Trial Balance -> Financial Statements
D. Trial Balance -> Journal -> Ledger -> Financial Statements
5. Which of the following is NOT a source document?
A. Purchase order
B. Bank statement
C. General journal
D. Cheque counterfoil
,6. The process of transferring information from the journal to the ledger is called:
A. Journalizing
B. Posting
C. Balancing
D. Adjusting
7. A business sells goods on credit to a customer. Which accounts are affected?
A. Cash and Sales
B. Cost of Sales and Inventory
C. Accounts Receivable and Sales
D. Accounts Payable and Purchases
8. Which principle states that expenses should be recorded in the same period as the
revenues they helped to generate?
A. Cost Principle
B. Business Entity Principle
C. Matching Principle
D. Going Concern Principle
Category 2: Journals and Subsidiary Journals
9. The General Journal is typically used for:
A. Recording all credit sales
B. Recording transactions that do not fit into other special journals
C. Recording all cash payments
D. Recording all credit purchases
10. The journal used to record all cash receipts is the:
A. Cash Payments Journal
B. Purchases Journal
C. Cash Receipts Journal
D. Sales Journal
11. A credit purchase of inventory would be recorded in the:
A. Sales Journal
B. Cash Receipts Journal
C. Purchases Journal
D. General Journal
12. The total of the Sales Journal is posted to the:
A. Debit of Accounts Receivable and Credit of Sales
B. Debit of Sales and Credit of Accounts Receivable
, C. Debit of Cash and Credit of Sales
D. Debit of Accounts Payable and Credit of Purchases
13. A correction of an error from a previous period would be recorded in the:
A. Cash Payments Journal
B. Purchases Journal
C. Sales Journal
D. General Journal
14. In the Cash Receipts Journal, a cash sale of inventory would be recorded by:
A. Debiting Cash and Crediting Sales
B. Debiting Sales and Crediting Cash
C. Debiting Accounts Receivable and Crediting Sales
D. Debiting Cost of Sales and Crediting Inventory
15. The column total for "Accounts Payable" in the Cash Payments Journal is posted to
the:
A. Debit of the Accounts Payable control account
B. Credit of the Accounts Payable control account
C. Debit of the Accounts Receivable control account
D. Credit of the Cash account
Category 3: Ledger Accounts and the Trial Balance
16. An account has a debit balance. This account could be:
A. Revenue
B. Liability
C. Owner's Equity
D. Asset
17. Which of the following accounts normally has a credit balance?
A. Equipment
B. Rent Expense
C. Accounts Payable
D. Drawings
18. The main purpose of a trial balance is to:
A. Prove that no errors have been made
B. Prove the equality of debits and credits in the ledger
C. Prepare the financial statements
D. Identify all fraudulent transactions
2026 COMPLETE ANSWERS AND
CORRECT SOLUTIONS || 100%
GUARANTEED PASS <RECENT
VERSION>
Category 1: The Accounting Cycle and Source Documents
1. What is the first step in the accounting cycle?
A. Preparing financial statements
B. Identifying and analyzing business transactions
C. Posting to the ledger
D. Recording adjusting entries
2. A sales invoice is a source document that provides evidence of:
A. A cash purchase
B. A credit sale
C. A cash receipt
D. A payment to a supplier
3. The primary purpose of the ledger is to:
A. Record transactions in chronological order
B. Prepare the trial balance
C. Provide a summary of all transactions for each account
D. Journalize adjusting entries
4. The correct sequence of the accounting cycle is:
A. Journal -> Ledger -> Trial Balance -> Financial Statements
B. Financial Statements -> Trial Balance -> Ledger -> Journal
C. Ledger -> Journal -> Trial Balance -> Financial Statements
D. Trial Balance -> Journal -> Ledger -> Financial Statements
5. Which of the following is NOT a source document?
A. Purchase order
B. Bank statement
C. General journal
D. Cheque counterfoil
,6. The process of transferring information from the journal to the ledger is called:
A. Journalizing
B. Posting
C. Balancing
D. Adjusting
7. A business sells goods on credit to a customer. Which accounts are affected?
A. Cash and Sales
B. Cost of Sales and Inventory
C. Accounts Receivable and Sales
D. Accounts Payable and Purchases
8. Which principle states that expenses should be recorded in the same period as the
revenues they helped to generate?
A. Cost Principle
B. Business Entity Principle
C. Matching Principle
D. Going Concern Principle
Category 2: Journals and Subsidiary Journals
9. The General Journal is typically used for:
A. Recording all credit sales
B. Recording transactions that do not fit into other special journals
C. Recording all cash payments
D. Recording all credit purchases
10. The journal used to record all cash receipts is the:
A. Cash Payments Journal
B. Purchases Journal
C. Cash Receipts Journal
D. Sales Journal
11. A credit purchase of inventory would be recorded in the:
A. Sales Journal
B. Cash Receipts Journal
C. Purchases Journal
D. General Journal
12. The total of the Sales Journal is posted to the:
A. Debit of Accounts Receivable and Credit of Sales
B. Debit of Sales and Credit of Accounts Receivable
, C. Debit of Cash and Credit of Sales
D. Debit of Accounts Payable and Credit of Purchases
13. A correction of an error from a previous period would be recorded in the:
A. Cash Payments Journal
B. Purchases Journal
C. Sales Journal
D. General Journal
14. In the Cash Receipts Journal, a cash sale of inventory would be recorded by:
A. Debiting Cash and Crediting Sales
B. Debiting Sales and Crediting Cash
C. Debiting Accounts Receivable and Crediting Sales
D. Debiting Cost of Sales and Crediting Inventory
15. The column total for "Accounts Payable" in the Cash Payments Journal is posted to
the:
A. Debit of the Accounts Payable control account
B. Credit of the Accounts Payable control account
C. Debit of the Accounts Receivable control account
D. Credit of the Cash account
Category 3: Ledger Accounts and the Trial Balance
16. An account has a debit balance. This account could be:
A. Revenue
B. Liability
C. Owner's Equity
D. Asset
17. Which of the following accounts normally has a credit balance?
A. Equipment
B. Rent Expense
C. Accounts Payable
D. Drawings
18. The main purpose of a trial balance is to:
A. Prove that no errors have been made
B. Prove the equality of debits and credits in the ledger
C. Prepare the financial statements
D. Identify all fraudulent transactions
