MCQs on Journal Entries

A journal entry can have many meanings, like a journey entry of daily activities of a normal person, etc. However, an entry is a term in finance that means keeping or making records of transactions. The transactions could be economic or non-economic. The journal entries could also be unique items and recurring items. The recurring items include bond amortisation or depreciation. To record journal entries, the person should have sound knowledge of experience of working, types of accounts, the golden rules of accounting, and credit and debit transactions.

MCQ’s

1) Which of the terms given below will be regarded as the book of original entry?

1. a) The trial balances
2. b) The general journal
3. c) The general ledger
4. d) The payment and receipt account

Ans: c) The general journal

Explanation:

The general journal is the book of original entry, as all the business transactions are recorded in this book initially.

2) The shareholder’s equity will not be affected by the following transactions?

1. a) The dividends to stockholders
2. b) The total net loss incurred
3. c) The investment of the cash by the stockholders
4. d) The land purchase made from proceeds of a bank loan

Ans: d) The land purchase was made from the proceeds of a bank loan.

Explanation:

The land purchase made from proceeds of bank proceedings will have no impact on shareholders’ equity because its impact will be limited to the liability and assets only.

3) The cash withdrawal due to business from the proprietor should be put into which account?

1. a) The purchase accounts
2. b) The cash account
3. c) The drawings account
4. d) The capital accounts

Ans: b) The cash account

Explanation:

The cash withdrawal by the writer should be debited from the drawing account of the bank. However, the cash amount credits by the proprietor should go to the business’s cash account.

4) All the transactions of an organisation should be first recorded into which book or account?

1. a) T accounts
2. b) The equation of accounting
3. c) The book of original entry
4. d) The book of final entry

Ans: c) The book of original entry

Explanation:

The journal, also known as the book of the original entry, contains all the initial business transactions. As the name suggests, all the initial or the original transactions should be recorded in this book first.

5) Which of the following statements concerning journal entries are not correct?

1. a) The journal entries show the effect of transactions
2. b) The debited account titles are listed first in the journal
3. c) The account balance is a provided by the journal entries
4. d) Each journal entry should start with the date

Ans: c) The don’t balance provided by the journal entries

Explanation:

The journal entry records all the transactions of either economic or non-economic nature. It does not involve maintaining the account balance.

6) The goods which the customers return will be debited to which of the following accounts?

1. a) The return inward
2. b) The return outward
3. c) The account of the purchases
4. d) The customer A/C

Ans: a) The return inward

Explanation:

The journal entry for the goods written by the customer will be debited to the sales return of the return inwards account. 

7) The journalist transactions are recorded in which order?

1. a) The alphabetical order
2. b) The chronological order
3. c) The increasing order
4. d) The decreasing order

Ans: b) The chronological order

Explanation:

The order by date format is used for transactions recorded by the journal in debit and credit format. Hence, the journal transactions will occur in chronological order, with the earliest entry being recorded first.

8) What is the journal alternatively called?

1. a) A book of the history of transactions
2. b) The ledger books
3. c) The entry book of transactions
4. d) The day books

Ans: d) The daybook

Explanation:

The journal is a book in which the transactions are initially returned before posting them into accounts in the ledger. Hence, the journal is also called the daybook or book of original entries.

9) The entry made by the payee in his books of accounts on the receipt of the bill is known as?

1. a) Drawer account Dr. to Bills payable account
2. b) Drawee account Dr. to a bank account
3. c) Bills receivable account Dr. to drawee of the bill
4. d) Bank account Dr. discount account Dr .to bills receivable account

Ans: c) Bills receivable account Dr. to drawee the bill

Explanation:

When is the will received by the paying them the entry will be made in the bills receivable account Dr. to the drawee of the bill?

10) The receipt and the payment account are the summaries of which the following?

1. a) The profit and the loss account
2. b) The trading accounts
3. c) The cash book with the date column
4. d) The cash book without the date column

Ans: d) The cash book without the date column

Explanation:

The profit and loss are not accounted for in the receipt and payment account summary, nor is the trading account considered. The receipt and payment account summary will be of the cash book but excluding the date column.

11) The Rs. 100o of the rent is debited to the landlord’s account; what will serve as a rectification entry for the above error?

1. a) Rent A/C debit 1000 to the personal account of landlord A/C 1000

b)Rent A/C debit 1500 to the personal account of landlord A/C 1500

1. c) Rent A/C 1000 debit to Bank A/C 2000
2. d) None of the above

Ans: a)Rent A/C debit 1000 to the personal account of landlord A/C 1000

Explanation:

An equal amount of money will have to go to the personal account of the landlord, and it should be the rent money.

12) What would the accounting entry be for the destruction of stock worth 25,000Rs by fire which has not been insured?

1. a) Dr trading AC 25,000 CR stock A/C 25,000

b)Dr stock AC 25,000 CR trading A/C 25,000

c)Dr profit and loss AC 25,000 CR trading A/C 25,000

1. d) None of the above

Ans: c)Dr profit and loss AC 25,000 CR trading A/C 25,000

Explanation:

A loss has been incurred, and the trading is part of it, so the entry in option c would be correct for the destruction of stock by fire since it was not insured. So, the loss will not be covered by the insurance.

13) The process in which the transactions are recorded in various journals is called:

1. a) Entry making
2. b) Journalising
3. c) Posting
4. d) Adjusting

Ans: Journalising

Explanation:

The process in which the transactions are recorded in various journals is called Journalising. This activity will only refer to an only double-entry system of bookkeeping.

14) What is the minimum number of accounts affected by any business transaction?

1. a) One
2. b) Two
3. c) Four
4. d) Indefinite

Ans: b) Two

Explanation:

Every business transaction should compulsorily be recorded on two accounts in the double-entry Journalising system at a minimum.

15) The journal entry involving more than two accounts being debited or credited is referred to as?

a)The  Journal entry

1. b) The Compound entry
2. c) The Additional entry
3. d) The Multi entry

Ans: d) Compound entry

Explanation:

The compound entry is the type of entry which involves crediting or debiting more than two accounts.

16) Making entries in the journal or Journalising is performed how many times a year?

1. a) At the end of the accounting period
2. b) Once every year
3. c) Three times every year
4. d) A lot of times during the accounting period

Ans: d) A lot of times during the accounting period

Explanation:

The accounting cycle of an organisation begins with a recording of the entries in the journal. This is the period of accounting, and the process of Journalising is performed very often.

17) Which of the following accounts get debited of cash from the business withdrawn by the owner for his personal use?

1. a) Business account
2. b) Drawings account
3. c) Cash account
4. d) Stock

Ans: b) Drawings account

Explanation:

Cash or the goods that the wonder withdraws for personal use will reduce the inventory and be recorded in the drawings account.

18) The opening balance of prepaid insurance is Rs 20,000. One fifth expires during the accounting year. The adjustment entry will involve the credit of:

1. a) Rs 4000 to prepaid insurance account
2. b) Rs 40000 to prepaid insurance account
3. c) Rs 4000 to an insurance expense account
4. d) Rs 40000 to an insurance expense account

Ans: a) Rs 4000 to prepaid insurance account

Explanation:

The one-fifth amount has expired; hence the one-fifth amount needs to be credited to the same account that is the prepaid insurance account.

19) What does the cash book’s debit balance represent at the end of the year?

1. a) Total amount of cash received in a year
2. b) Total amount of cash paid in a year
3. c) The total income of the organisation
4. d) The in-hand cash at the end of the given period

Ans: d) The in-hand cash at the end of the given period.

Explanation:

The debit balance exists if the firm makes more deposits than it withdraws.

Hence, it’s the amount of cash-in-hand in hand at the end of a given period.