Instructions: Choose the best answer for each question.

Multiple-Choice Quiz: The Accounting Cycle

1. Which step of the accounting cycle is considered the "first place" a transaction is officially recorded, like a day-by-day diary?

A. Post to the ledger

B. Prepare the unadjusted trial balance

C. Journalize transactions

D. Identify the transaction and events

2. Which of the following journals is specifically used to record a service business’s transaction when a customer pays cash for the service immediately?

A. Sales Journal

B. Cash Payments Journal

C. General Journal

D. Cash Receipts Journal

3. The step in the cycle that involves transferring the debit and credit totals from the journals to the individual account records is called:

A. Journalizing

B. Adjusting

C. Posting to the ledger

D. Preparing the post-closing trial balance

4. The primary purpose of preparing a/an unadjusted trial balance is to:

A. Ensure that total Debits equal total Credits.

B. Determine the business’s net income.

C. Record revenue that has been earned but not yet billed.

D. Reset all temporary accounts to zero.

5. Entries made at the end of the accounting period to record things like the use of supplies, or the portion of insurance that has expired, are called:

A. Closing entries

B. Reversing entries

C. Adjusting entries

D. Compound entries

6. Which of the following financial statements is prepared first because its result (Net Income or Loss) is needed for the next statement?

A. Balance Sheet

B. Statement of Cash Flow

C. Statement of Changes in Owner’s Equity

D. Income Statement

7. Which account types are considered nominal (temporary) and are therefore reset to zero during the closing entries step?

A. Assets and Liabilities

B. Revenue, Expenses, and Owner's Drawings

C. Assets and Owner's Equity

D. Liabilities and Revenue

8. A credit purchase of a new office computer (an asset, not a regular supply) should be recorded in which journal?

A. Sales Journal

B. Purchases Journal

C. Cash Payments Journal

D. General Journal

9. The final step of the accounting cycle, the reversing entry, is considered:

A. Mandatory for all businesses.

B. An optional step used to simplify the recording process in the new period.

C. A step that checks for errors after the closing entries.

D. The process of preparing the last financial statement.

10. What does the Post-Closing Trial Balance include?

A. All accounts (Assets, Liabilities, Equity, Revenue, and Expenses).

B. Only the permanent accounts (Assets, Liabilities, and Owner's Equity).

C. Only the temporary accounts (Revenue, Expenses, and Drawings).

D. Only the balances after the adjusting entries are made, but before closing.