Business Transaction Recording

What is a source document?

A document that summarizes all business transactions

A document that lists all assets and liabilities of a business

A document that summarizes the financial performance of a business

A document that provides evidence about a business transaction

Which of the following is not true about accounting vouchers?

There is a set format for accounting vouchers.

Voucher which records a transaction that entails multiple debits/credits and one credit/debit is called Compound voucher.

Voucher which records a transaction that entails one debit, and one credit is called Transaction voucher.

The person who prepares the voucher must mention his name along with signature.

What is the fundamental accounting equation?

Assets = Liabilities + Owner's Equity

Assets + Liabilities = Owner's Equity

Assets = Liabilities - Owner's Equity

Liabilities = Owner's Equity

What is the rule of debit and credit for assets?

Debit the increase in assets and credit the decrease in assets.

Debit decrease in assets and credit increase in assets.

Debit increase in assets and credit increase in assets.

Debit decrease in assets and credit decrease in assets.

Which book of original entry records all cash purchases?

Cash Book

Sales Day Book

Purchase Day Book

Purchase Returns Book

What is the purpose of recording transactions in the journal?

To summarize transactions by account.

To provide a chronological record of transactions.

To make adjusting entries at the end of the accounting period.

To prepare financial statements.

What is the purpose of posting journal entries to the ledger?

To provide a chronological record of transactions.

To summarize transactions by account.

To make adjusting entries at the end of the accounting period.

To prepare financial statements.

If a transaction is properly analysed and recorded:

Only two accounts will be used to record the transaction.

One account will be used to record transaction.

One account balance will increase and another will decrease.

Total amount debited will equals total amount credited.

Journal entry to record salaries will include:

Debit salaries Credit cash.

Debit capital Credit cash.

Debit cash Credit salary.

Debit salary Credit creditors.

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