Bookkeeping Journal Flashcards

Which of the following transactions would be recorded in the cash receipts journal?

Answer: Collection of an accounts receivable balance

The cash receipts journal records all incoming cash, including collections from customers who previously bought on credit.

What is the effect of debiting the Unearned Revenue account?

Answer: It decreases a liability and is recorded when revenue is earned

Debiting Unearned Revenue reduces the liability as the business fulfills its obligation and recognizes the earned revenue.

A $150 bank service charge appears on the bank statement but not in the company's books. The correcting journal entry is:

Answer: Debit Bank Service Charge Expense $150; Credit Cash $150

Bank charges reduce the company's cash balance, so an expense is recognized and cash is credited to reflect the reduction.

When depreciation is recorded, which accounts are affected?

Answer: Depreciation Expense is debited; Accumulated Depreciation is credited

Depreciation increases an expense account and increases a contra-asset account (Accumulated Depreciation), not the asset itself.

Which of the following is an example of a simple journal entry?

Answer: Debit Cash $500; Credit Service Revenue $500

A simple journal entry involves exactly two accounts — one debit and one credit — as opposed to a compound entry with multiple accounts.

The Purchases Journal is used to record purchases of:

Answer: Merchandise inventory on credit

The purchases journal is a special journal specifically for recording merchandise bought on credit from suppliers.

What does a credit entry to the Notes Payable account indicate?

Answer: The business has borrowed money and increased its debt

Crediting Notes Payable increases the liability, indicating the business has taken on new debt by signing a promissory note.