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Chapter 5
Chart of Accounts
59
Accounting
11th Grade
09/07/2006
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Term
Define account number
 Definition
The number assigned to an account.
Term
Define correcting entry
 Definition
A journal entry made to correct an error in the ledger.
Term
Define file maintenance
 Definition
The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.
Term
Define general ledger
 Definition
A ledger that contains all accounts needed to prepare financial statements.
Term
Define ledger
 Definition
A group of accounts.
Term
Define opening an account
 Definition
Writing an account title and number on the heading of an account.
Term
Define posting
 Definition
Transferring information from a journal entry to a ledger account.
Term
Define proving cash
 Definition
Determining that the amount of cash agrees with the balance of the cash account in the accounting records.
Term
T/F
Because an account form has columns for the debit and credit balance of an account, it is often referred to as the balance-ruled account form.
 Definition
True
Term
T/F
The asset division accounts for Encore Music are numbered in the 100s.
 Definition
True
Term
T/F
The cash account is the first asset account and is numbered 110.
 Definition
True
Term
T/F
The second division of Encore Music's chart of accounts is the owner's equity division.
 Definition
False
Term
T/F
The first digit of account numbers for accounts in the owner's equity ledger division is 3.
 Definition
True
Term
T/F
The last two digits in a 3-digit account number indicate the general ledger division of the account.
 Definition
False
Term
T/F
When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515.
 Definition
True
Term
T/F
Encore Music arranges expense accounts in chronological order in its general ledger.
 Definition
False
Term
T/F
The two steps for opening an account are writing the account title and recording the balance.
 Definition
False
Term
T/F
Each amount in the Debit and Credit columns in a general journal is posted to the account written in the Account Title column.
 Definition
True
Term
T/F
The posting reference should always be recorded in the journal's Post. Ref. column before amounts are recorded in the ledger.
 Definition
False
Term
T/F
The only reason for the Post. Ref. columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted.
 Definition
False
Term
T/F
The steps for posting are to write the date, journal page number, amount, and balance.
 Definition
False
Term
T/F
If the previous account balance and the current entry posted to an account are both debits, the new account balance is a debit.
 Definition
True
Term
T/F
When all posting is complete, the journal's Post. Ref. column is completely filled.
 Definition
True
Term
T/F
Cash is proved by comparing the cash balance shown in the checkbook with th ecash balance in the general ledger cash account.
 Definition
True
Term
Normal balance of Cash
 Definition
Debit
Term
Normal balance of owner's capital account.
 Definition
Credit
Term
Account balance column in which the account balance is recorded when the only entry is a credit.
 Definition
Credit
Term
Balance column in the capital account after an intial investment is posted.
 Definition
Credit
Term
Normal balance of Supplies.
 Definition
Debit
Term
Column in the accounts payable account in which an entry for supplies bought on account is posted.
 Definition
Credit
Term
Account balance column in which the new account balance is recorded when the previous balance is a debit of $500.00 and the current entry is a credit of $200.00.
 Definition
Debit
Term
Normal balance of Sales
 Definition
Credit
Term
Normal balance of Rent Expense
 Definition
Debit
Term
Balance column in the cash account which is compared with the checkbook to prove cash.
 Definition
Debit
Term
Account numbers may be assigned by 10s so that new accounts can be easily added.
 Definition
True
Term
T/F
A journal shows in one place all the changes in a single account.
 Definition
False
Term
T/F
The procedure of arranging accounts in a general ledger, assigning account numbers, and keeping records current is posting.
 Definition
False
Term
T/F
If a business has only two asset accounts, Cash and Supplies, the two accounts are numbered 110 and 120.
 Definition
True
Term
T/F
If a new account is located between accounts numbered 510 and 520, the new account number should be 115.
 Definition
True
Term
T/F
A journal page number is written in the Post. Ref. column of an account to show that posting of the entry is completed.
 Definition
False
Term
T/F
The account number is placed in the Post. Ref. column of the journal as the last step in the posting procedure.
 Definition
True
Term
T/F
If the previous account balance and the current entry posted to an account are both debits, the new account balance is a debit.
 Definition
True
Term
T/F
The Cash account is the first asset account and is numbered 100.
 Definition
False
Term
T/F
When adding a new expense account between accounts numbered 510 and 520, the new account is assigned the account number 515.
 Definition
True
Term
T/F
The two steps for opening an account are writing the account title and recording the balance.
 Definition
False
Term
T/F
The posting reference should always be recorded in the journal's Post. Ref. column before amounts are recorded in the ledger.
 Definition
False
Term
T/F
The only reason for the Post. Ref. columns of the journal and general ledger is to indicate which entries in the journal still need to be posted if posting is interrupted.
 Definition
False
Term
T/F
When all posting is complete, the journal's Post. Ref. column is completely filled.
 Definition
True
Term
T/F
The first digit in the account number 120 means that the account is in the liability division of the general ledger.
 Definition
False
Term
T/F
When accounts are arranged in a general ledger, account numbers are assigned, and the chart of accounts is kept up to date, the accounting personnel are doing the file maintenance.
 Definition
True
Term
T/F
The procedure for transferring information from a journal entry to a ledger account is journalizing.
 Definition
False
Term
T/F
The first step in the posting procedure is writing the journal page number in the Post. Ref. column of the account.
 Definition
False
Term
T/F
The last step in the posting procedure is writing the entry amount in the Debit or Credit column of the account.
 Definition
False
Term
T/F
An account number in the journal's Post. Ref. column shows the account to which an amount is posted.
 Definition
True
Term
T/F
Posting references in a journal are not necessary.
 Definition
False
Term
T/F
If posting is interrupted, the accounting personnel know to resume posting the next day.
 Definition
False
Term
T/F
When the previous balance of an account is zero and a credit amount is posted to the account, the new balance is a credit.
 Definition
True
Term
T/F
Determining that the amount of cash agrees with the accounting records is proving cash.
 Definition
True
Term
T/F
Accounting ROCKS!!!
 Definition
Of course it does....
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