10 Lecture - Exercises: Recording of Transactions

  1. Home
  2. Courses
  3. FINANCIAL ACCOUNTING
  4. 10 Lecture

10 Lecture

MGT101

Midterm & Final Term Short Notes

Exercises: Recording of Transactions

Exercises on Recording of Transactions are practical exercises that help students understand how to record transactions in the accounting system. These exercises involve analyzing transactions and recording them in the appropriate accounts. By p


Important Mcq's
Midterm & Finalterm Prepration
Past papers included

Download PDF

  1. Which of the following accounts is classified as an asset? a. Accounts payable b. Common stock c. Inventory d. Retained earnings Answer: c. Inventory

  2. What is the accounting equation? a. Assets = Liabilities - Equity b. Assets - Liabilities = Equity c. Assets + Liabilities = Equity d. Assets = Liabilities + Equity Answer: d. Assets = Liabilities + Equity

  3. Which of the following accounts increases with a debit? a. Accounts payable b. Common stock c. Sales revenue d. Rent expense Answer: d. Rent expense

  4. What is the normal balance for liabilities? a. Debit b. Credit c. Neither debit nor credit d. Both debit and credit Answer: b. Credit

  5. Which of the following transactions would decrease assets and decrease liabilities? a. Payment of accounts payable b. Purchase of inventory on credit c. Sale of goods on credit d. Receipt of cash from a customer Answer: a. Payment of accounts payable

  6. Which of the following financial statements shows the net income of a company? a. Balance sheet b. Income statement c. Statement of retained earnings d. Statement of cash flows Answer: b. Income statement

  7. Which of the following accounts is classified as a liability? a. Accounts receivable b. Prepaid rent c. Notes payable d. Supplies expense Answer: c. Notes payable

  8. Which of the following transactions would increase both assets and liabilities? a. Purchase of equipment with cash b. Sale of goods on credit c. Borrowing money from a bank d. Payment of accounts payable Answer: c. Borrowing money from a bank

  9. What is the normal balance for equity accounts? a. Debit b. Credit c. Neither debit nor credit d. Both debit and credit Answer: b. Credit

  10. Which of the following financial statements shows a company's cash flows from operating, investing, and financing activities? a. Balance sheet b. Income statement c. Statement of retained earnings d. Statement of cash flows Answer: d. Statement of cash flows



Subjective Short Notes
Midterm & Finalterm Prepration
Past papers included

Download PDF

  1. What is a transaction in accounting? Answer: A transaction in accounting is any economic event that affects a company's financial position and is recorded in the accounting system.

  2. What is the purpose of a journal entry? Answer: The purpose of a journal entry is to record a transaction in the accounting system.

  3. What is the difference between a debit and a credit in accounting? Answer: In accounting, a debit is an entry made on the left side of an account, while a credit is an entry made on the right side of an account.

  4. What is the double-entry accounting system? Answer: The double-entry accounting system is a system of accounting that requires every transaction to be recorded in at least two accounts.

  5. What is the trial balance? Answer: The trial balance is a list of all accounts and their balances at a specific point in time, used to ensure that the total debits equal the total credits in the accounting system.

  6. What is the purpose of the income statement? Answer: The purpose of the income statement is to show a company's revenues and expenses over a specific period of time, typically a quarter or a year.

  7. What is the purpose of the balance sheet? Answer: The purpose of the balance sheet is to show a company's financial position at a specific point in time by listing its assets, liabilities, and equity.

  8. What is the purpose of the statement of cash flows? Answer: The purpose of the statement of cash flows is to show how a company generated and used cash during a specific period of time.

  9. What is the difference between cash and accrual accounting? Answer: Cash accounting records transactions when cash is received or paid, while accrual accounting records transactions when they occur, regardless of when cash is received or paid.

  10. What is the purpose of adjusting entries? Answer: The purpose of adjusting entries is to update account balances and ensure that the financial statements reflect accurate information at the end of an accounting period.

Recording transactions is a fundamental aspect of accounting. It involves documenting every financial event that impacts a business's financial position. These transactions are recorded in a company's accounting system using journal entries. Journal entries consist of two parts: a debit and a credit. Debits are entries made on the left side of an account, while credits are entries made on the right side of an account. Every transaction has an equal amount of debits and credits, ensuring that the accounting system remains in balance. Once transactions are recorded, they are posted to the company's general ledger, which contains all the accounts used in the accounting system. The general ledger is used to prepare the trial balance, which is a list of all accounts and their balances at a specific point in time. The trial balance is used to ensure that the total debits equal the total credits in the accounting system. Financial statements are then prepared based on the transactions recorded in the accounting system. The income statement shows a company's revenues and expenses over a specific period of time, while the balance sheet shows a company's financial position at a specific point in time by listing its assets, liabilities, and equity. The statement of cash flows shows how a company generated and used cash during a specific period of time. Adjusting entries are made at the end of an accounting period to update account balances and ensure that the financial statements reflect accurate information. These entries include items such as depreciation, accruals, and prepayments. Overall, the recording of transactions is essential in accounting as it provides a detailed record of a company's financial activity, allowing business owners and stakeholders to make informed decisions based on accurate financial information.

Course Lectures