ACC 201 ACTUAL Exam Questions and
CORRECT Answers
Which of the following is used as evidence to determine a transaction's effects on specific
accounts? - CORRECT ANSWER -source documents
What effect may result if specific account titles are not used in journalizing? - CORRECT
ANSWER -The financial statements may be not be accurate.
Updating the accounts in the ledger with the effects of transactions is - CORRECT
ANSWER -the primary purpose of the recording process.
During the month of August, Jackson Products recognizes $15,000 in revenues. Jackson's
accounting staff records these revenues by entering a $15,000 debit in the firm's Revenues
account and a $15,000 credit in the Accounts Receivable account. What, if any, effect will this
entry have on Jackson's financial statements? - CORRECT ANSWER -This entry will
inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its
income statement, ending retained earnings too low on its retained earnings statement, and both
its assets and its stockholders' equity too low on its balance sheet.
Insight into the purpose of the entry is provided by the - CORRECT ANSWER -
explanation in the journal.
One of the purposes or benefits of journalizing transactions is to ensure that financial statements
are always correct. - CORRECT ANSWER -False
What is the primary purpose of the recording process? - CORRECT ANSWER -to get the
accounts in the ledger updated with effects of transactions
Evidence for a transaction comes in the form of - CORRECT ANSWER -source
documents.
, On March 15, Morgan Corporation paid $1,000 to buy a one-year insurance policy that will
expire exactly one year after the date of purchase. Morgan's accounting clerk tells his supervisor
that this transaction will affect only the assets portion of the company's balance sheet. Is the clerk
correct? Why or why not? - CORRECT ANSWER -Yes, the clerk is correct. Because the
insurance policy will benefit more than one accounting period, it should be treated as an asset,
not as a liability or expense.
Proving the equality of the debit and credit amounts after posting is the primary purpose of the
trial balance. - CORRECT ANSWER -True
What happens when a business pays a liability? Select all that apply. - CORRECT
ANSWER -Accounts payable decrease; Cash decreases.
A trial balance is a listing of _______ ______ accounts and balances. - CORRECT
ANSWER -general ledger
A ______ ______ would be helpful in detecting that $945 rather than $954 was recorded when
transferring the debit side of a journal entry to the ledger. - CORRECT ANSWER -trial
balance
Accumulating the effects of journalized transactions in the individual accounts is the main
purpose of the procedure called _______. - CORRECT ANSWER -posting
Typically the _____ _____ _____ begins with asset accounts. - CORRECT ANSWER -
chart of accounts
An individual accounting record of increases and decreases in specific asset, liability, and
stockholders' equity items is a(n) _____ - CORRECT ANSWER -account
What could happen when an individual asset is increased?
A. None of the choices is correct.
CORRECT Answers
Which of the following is used as evidence to determine a transaction's effects on specific
accounts? - CORRECT ANSWER -source documents
What effect may result if specific account titles are not used in journalizing? - CORRECT
ANSWER -The financial statements may be not be accurate.
Updating the accounts in the ledger with the effects of transactions is - CORRECT
ANSWER -the primary purpose of the recording process.
During the month of August, Jackson Products recognizes $15,000 in revenues. Jackson's
accounting staff records these revenues by entering a $15,000 debit in the firm's Revenues
account and a $15,000 credit in the Accounts Receivable account. What, if any, effect will this
entry have on Jackson's financial statements? - CORRECT ANSWER -This entry will
inappropriately decrease Jackson's revenues, thus making the firm's net income too low on its
income statement, ending retained earnings too low on its retained earnings statement, and both
its assets and its stockholders' equity too low on its balance sheet.
Insight into the purpose of the entry is provided by the - CORRECT ANSWER -
explanation in the journal.
One of the purposes or benefits of journalizing transactions is to ensure that financial statements
are always correct. - CORRECT ANSWER -False
What is the primary purpose of the recording process? - CORRECT ANSWER -to get the
accounts in the ledger updated with effects of transactions
Evidence for a transaction comes in the form of - CORRECT ANSWER -source
documents.
, On March 15, Morgan Corporation paid $1,000 to buy a one-year insurance policy that will
expire exactly one year after the date of purchase. Morgan's accounting clerk tells his supervisor
that this transaction will affect only the assets portion of the company's balance sheet. Is the clerk
correct? Why or why not? - CORRECT ANSWER -Yes, the clerk is correct. Because the
insurance policy will benefit more than one accounting period, it should be treated as an asset,
not as a liability or expense.
Proving the equality of the debit and credit amounts after posting is the primary purpose of the
trial balance. - CORRECT ANSWER -True
What happens when a business pays a liability? Select all that apply. - CORRECT
ANSWER -Accounts payable decrease; Cash decreases.
A trial balance is a listing of _______ ______ accounts and balances. - CORRECT
ANSWER -general ledger
A ______ ______ would be helpful in detecting that $945 rather than $954 was recorded when
transferring the debit side of a journal entry to the ledger. - CORRECT ANSWER -trial
balance
Accumulating the effects of journalized transactions in the individual accounts is the main
purpose of the procedure called _______. - CORRECT ANSWER -posting
Typically the _____ _____ _____ begins with asset accounts. - CORRECT ANSWER -
chart of accounts
An individual accounting record of increases and decreases in specific asset, liability, and
stockholders' equity items is a(n) _____ - CORRECT ANSWER -account
What could happen when an individual asset is increased?
A. None of the choices is correct.
