Tag: meaning and importance of journal

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Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

The following comments all relate to the recording process. Which of these statements is correct?

  1. The general journal is a chronological record of transactions.

  2. The general ledger is posted from transactions recorded in the general journal.

  3. The trial balance provides the primary source document for recording transactions into the general journal.

  4. Transposition is the transfer of information from the general journal to the general ledger.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The general journal is the book of original entry where transactions are recorded in chronological order. The general ledger is posted from the journal, not the other way around, and the trial balance is a summary report, not a source document.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Transactions that a business doesn't record in any specialized journal are recorded in which journal or book?

  1. Cash payments journal

  2. Cash receipts journal

  3. Purchases return journal

  4. General journal
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Specialized journals are used for repetitive transactions like cash receipts or purchases. Any transaction that does not fit into these specialized journals is recorded in the general journal.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

Journal is a book of __________.

  1. original entry

  2. all cash transactions

  3. secondary entry

  4. all non-cash transactions
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The journal is known as the book of original entry because it is the first place where financial transactions are recorded chronologically before being posted to the ledger.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

The process of recording a transaction in the journal is called __________.

  1. Posting

  2. Journalising

  3. Tallying

  4. Casting

  5. Balancing
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Journalising is the specific accounting term for the act of recording transactions into the journal. Posting refers to moving data from the journal to the ledger.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

XYZ company purchase an asset that turns out to be defective and was required to be sold as a worn out item. The entry will be made in _______________.

  1. Worn out journal

  2. Cash journal

  3. General journal

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Since the transaction involves the disposal of a defective asset, it is a non-routine transaction that does not fit into specialized journals like cash or sales journals, thus it is recorded in the general journal.

Multiple choice elements of accounts accounting in business journal - book of original entry purchases and sales book meaning and importance of journal

What will be journal entry when cash is withdrawn from bank for personal use?

  1. Drawings A/c debit, bank A/c credit

  2. Cash A/c debit, drawings A/c credit

  3. Bank A/c debit, drawings A/c credit

  4. Bank A/c debit, capital A/c credit
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Drawings are the amounts taken by the owner of a business for his personal use in anticipation of profit. Drawings are usually made in the form of cash, but there could be other assets or goods withdrawn by the owner for his personal use.

Journal Entry will be:-
Drawing A/c Dr. 
   To Bank A/c.