Fall Semester 2025 | UNISA Assignment | AIN2601 –
Practical Accounting Data Processing | Complete
Answers, Step-By-Step Examples & Updated Study
Guide | Due November/December 2025
Question 1:
Which of the following best describes the purpose of a trial balance?
A) To ensure that the accounts are properly journalized
B) To verify that total debits equal total credits
C) To list all the transactions within a period
D) To prepare financial statements
Correct Option: B
Rationale: The trial balance is a report that lists the balances of all accounts in the
general ledger to verify that total debits equal total credits, ensuring the accounting
equation is maintained.
Question 2:
Which accounting software feature aids in detecting errors during data entry?
A) Backup protection
B) Validation checks
C) Report generation
D) User access controls
Correct Option: B
Rationale: Validation checks verify that the data entered meets certain criteria, thus
helping to catch errors at the point of data entry before they affect financial reports.
Question 3:
In a double-entry accounting system, every transaction affects:
A) Only one account
B) Multiple financial statements
C) At least two accounts
D) Only the balance sheet
Correct Option: C
Rationale: Double-entry accounting requires that every transaction affects at least two
accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains
balanced.
Question 4:
,What is the main benefit of using automated data processing in accounting?
A) It eliminates the need for audits
B) It requires less training for staff
C) It increases efficiency and accuracy
D) It simplifies tax filing procedures
Correct Option: C
Rationale: Automated data processing significantly boosts efficiency by reducing
manual errors and speeding up transaction processing, leading to more accurate
financial reporting.
Question 5:
Which of the following is an example of a contra asset account?
A) Accounts Receivable
B) Accumulated Depreciation
C) Inventory
D) Cash
Correct Option: B
Rationale: Accumulated Depreciation is a contra asset account that reduces the value
of a fixed asset on the balance sheet, reflecting the wear and tear or usage over time.
Question 6:
What is the main purpose of the general ledger?
A) To store all sales invoices
B) To summarize all financial transactions
C) To manage payroll records
D) To track inventory levels
Correct Option: B
Rationale: The general ledger serves as the central repository of all financial
transactions for a company, summarizing those transactions into account balances for
further reporting and analysis.
Question 7:
Which accounting principle requires recognizing revenue when it is earned,
regardless of when cash is received?
A) Matching Principle
B) Historical Cost Principle
,C) Revenue Recognition Principle
D) Conservatism Principle
Correct Option: C
Rationale: The Revenue Recognition Principle dictates that revenue is recognized when
it is earned, regardless of the timing of cash flow, ensuring that financial statements
reflect the economic activity of the business accurately.
Question 8:
What does the acronym GAAP stand for?
A) Generally Accepted Accounting Principles
B) General Accounting and Auditing Practices
C) Government Auditing and Accounting Procedures
D) Generally Accurate Accounting Procedures
Correct Option: A
Rationale: GAAP refers to Generally Accepted Accounting Principles, which are the
framework of guidelines for financial accounting that companies must follow to ensure
consistency and transparency.
Question 9:
Which of the following is NOT classified as a current asset?
A) Cash
B) Accounts Receivable
C) Inventory
D) Land
Correct Option: D
Rationale: Land is considered a long-term asset because it is not intended to be
liquified or used up in the short term, whereas current assets are expected to be
converted to cash or used within one year.
Question 10:
What is the effect of a purchase of equipment on a company’s financial
statements?
A) Decrease in total liabilities
B) Increase in total assets
C) Decrease in equity
D) Increase in current liabilities
, Correct Option: B
Rationale: Purchasing equipment increases total assets on the balance sheet, as
equipment is a long-term asset. It may also affect cash flow but does not impact
liabilities or equity directly at the time of purchase.
Question 11:
How is net income calculated?
A) Revenues + Expenses
B) Revenues - Expenses
C) Assets - Liabilities
D) Cash Inflows - Cash Outflows
Correct Option: B
Rationale: Net income is calculated by subtracting total expenses from total revenues,
reflecting the profitability of a company during a specific period.
Question 12:
Which of the following represents an expense account?
A) Accumulated Depreciation
B) Rent Expense
C) Common Stock
D) Accounts Payable
Correct Option: B
Rationale: Rent Expense is an expense account that reflects the costs associated with
using rented space, impacting net income when reported on the income statement.
Question 13:
In accounting, what is the primary purpose of a cash flow statement?
A) To report profitability
B) To provide a snapshot of assets and liabilities
C) To show cash inflows and outflows
D) To summarize retained earnings
Correct Option: C
Rationale: The cash flow statement is designed to provide detailed information about
cash inflows and outflows from operating, investing, and financing activities, helping
assess the company’s liquidity.
Practical Accounting Data Processing | Complete
Answers, Step-By-Step Examples & Updated Study
Guide | Due November/December 2025
Question 1:
Which of the following best describes the purpose of a trial balance?
A) To ensure that the accounts are properly journalized
B) To verify that total debits equal total credits
C) To list all the transactions within a period
D) To prepare financial statements
Correct Option: B
Rationale: The trial balance is a report that lists the balances of all accounts in the
general ledger to verify that total debits equal total credits, ensuring the accounting
equation is maintained.
Question 2:
Which accounting software feature aids in detecting errors during data entry?
A) Backup protection
B) Validation checks
C) Report generation
D) User access controls
Correct Option: B
Rationale: Validation checks verify that the data entered meets certain criteria, thus
helping to catch errors at the point of data entry before they affect financial reports.
Question 3:
In a double-entry accounting system, every transaction affects:
A) Only one account
B) Multiple financial statements
C) At least two accounts
D) Only the balance sheet
Correct Option: C
Rationale: Double-entry accounting requires that every transaction affects at least two
accounts, ensuring that the accounting equation (Assets = Liabilities + Equity) remains
balanced.
Question 4:
,What is the main benefit of using automated data processing in accounting?
A) It eliminates the need for audits
B) It requires less training for staff
C) It increases efficiency and accuracy
D) It simplifies tax filing procedures
Correct Option: C
Rationale: Automated data processing significantly boosts efficiency by reducing
manual errors and speeding up transaction processing, leading to more accurate
financial reporting.
Question 5:
Which of the following is an example of a contra asset account?
A) Accounts Receivable
B) Accumulated Depreciation
C) Inventory
D) Cash
Correct Option: B
Rationale: Accumulated Depreciation is a contra asset account that reduces the value
of a fixed asset on the balance sheet, reflecting the wear and tear or usage over time.
Question 6:
What is the main purpose of the general ledger?
A) To store all sales invoices
B) To summarize all financial transactions
C) To manage payroll records
D) To track inventory levels
Correct Option: B
Rationale: The general ledger serves as the central repository of all financial
transactions for a company, summarizing those transactions into account balances for
further reporting and analysis.
Question 7:
Which accounting principle requires recognizing revenue when it is earned,
regardless of when cash is received?
A) Matching Principle
B) Historical Cost Principle
,C) Revenue Recognition Principle
D) Conservatism Principle
Correct Option: C
Rationale: The Revenue Recognition Principle dictates that revenue is recognized when
it is earned, regardless of the timing of cash flow, ensuring that financial statements
reflect the economic activity of the business accurately.
Question 8:
What does the acronym GAAP stand for?
A) Generally Accepted Accounting Principles
B) General Accounting and Auditing Practices
C) Government Auditing and Accounting Procedures
D) Generally Accurate Accounting Procedures
Correct Option: A
Rationale: GAAP refers to Generally Accepted Accounting Principles, which are the
framework of guidelines for financial accounting that companies must follow to ensure
consistency and transparency.
Question 9:
Which of the following is NOT classified as a current asset?
A) Cash
B) Accounts Receivable
C) Inventory
D) Land
Correct Option: D
Rationale: Land is considered a long-term asset because it is not intended to be
liquified or used up in the short term, whereas current assets are expected to be
converted to cash or used within one year.
Question 10:
What is the effect of a purchase of equipment on a company’s financial
statements?
A) Decrease in total liabilities
B) Increase in total assets
C) Decrease in equity
D) Increase in current liabilities
, Correct Option: B
Rationale: Purchasing equipment increases total assets on the balance sheet, as
equipment is a long-term asset. It may also affect cash flow but does not impact
liabilities or equity directly at the time of purchase.
Question 11:
How is net income calculated?
A) Revenues + Expenses
B) Revenues - Expenses
C) Assets - Liabilities
D) Cash Inflows - Cash Outflows
Correct Option: B
Rationale: Net income is calculated by subtracting total expenses from total revenues,
reflecting the profitability of a company during a specific period.
Question 12:
Which of the following represents an expense account?
A) Accumulated Depreciation
B) Rent Expense
C) Common Stock
D) Accounts Payable
Correct Option: B
Rationale: Rent Expense is an expense account that reflects the costs associated with
using rented space, impacting net income when reported on the income statement.
Question 13:
In accounting, what is the primary purpose of a cash flow statement?
A) To report profitability
B) To provide a snapshot of assets and liabilities
C) To show cash inflows and outflows
D) To summarize retained earnings
Correct Option: C
Rationale: The cash flow statement is designed to provide detailed information about
cash inflows and outflows from operating, investing, and financing activities, helping
assess the company’s liquidity.
