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ACCA Knowledge Level The Mechanics of the Accounting Process — practice questions

Explore 9 free The Mechanics of the Accounting Process questions in ACCA Knowledge Level Financial Accounting. Open each question or exercise to read its content, reference answers and available explanation.

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The Mechanics of the Accounting Process questions and exercises with answers

Showing questions 1–9 of 9.

In the journal, the terms "debit" and "credit" most precisely refer to which of the following?Read the answer and worked solution →When a revenue account such as Fees Earned increases because income is earned, the account is:Read the answer and worked solution →When journalizing a transaction, which account is conventionally entered first and on which line?Read the answer and worked solution →The process of copying entries from the journal to the ledger is called:Read the answer and worked solution →When posting, what should never appear as a running balance in a ledger account?Read the answer and worked solution →A Cash ledger shows these postings in order: debit 6,000; credit 2,000; credit 1,000; debit 5,000; credit 1,000. What is the ending running balance?Read the answer and worked solution →Match the Statement (ACCA FA)Read the answer and worked solution →P&L or Position? (ACCA FA)Read the answer and worked solution →Finish the Term (ACCA FA)Read the answer and worked solution →

Worked practice questions

In the journal, the terms "debit" and "credit" most precisely refer to which of the following?

  1. Increases and decreases respectively
  2. Good news and bad news for cash
  3. The left and the right money column
  4. Money received and money owed
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Correct answer: C. The left and the right money column

1. In the journal, the column heading Debit means "left" and Credit means "right." 2. The terms only indicate which money column an amount is entered in. 3. Debit does not always mean increase, so option A is wrong. 4. The terms are not tied to good or bad news, ruling out option B; nor to receipt versus owing, ruling out option D. 5. Therefore debit and credit mean the left and right columns. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.1 "The Journal", p.13_

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When a revenue account such as Fees Earned increases because income is earned, the account is:

  1. debited
  2. credited
  3. left blank
  4. reversed
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Correct answer: B. credited

1. The rule states: credit revenue when you earn it, because revenue increases. 2. Earning a fee increases the Fees Earned balance. 3. An increase in revenue is recorded on the credit side, not the debit side. 4. Therefore the revenue account is credited. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.2 "Rules of Debit and Credit", p.13_

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When journalizing a transaction, which account is conventionally entered first and on which line?

  1. The debited account, on the first line
  2. The credited account, on the first line
  3. The larger amount, on the second line
  4. The cash account, on the first line
Show answer and solution

Correct answer: A. The debited account, on the first line

1. Journalizing rules require the debit entry to always be listed first. 2. The account being debited goes on the first line with its amount in the Debit column. 3. The credited account goes on the second line, indented, so option A is wrong. 4. Ordering is by debit/credit, not by amount size or whether it is cash, ruling out C and D. 5. Therefore the debited account is entered first. _Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §1.3.3 "Journalizing Transactions", p.14_

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