Today we will learn “25 short questions and answers-Accounting Cycle“. It will definitely help you do well in any form of competitive exams, such as school or college viva tests, career written exams or interviews, etc.
If you want to do well in accounting, practice these 25 short questions and their answers on a regular basis.
For theory please read this article 10 steps of Accounting Cycle.
25 short questions and answers- Accounting Cycle
Question-1: What is the accounting cycle?
Answer: The continuous cycle of keeping accounts is known as the accounting cycle.
Question-2: What is the main purpose of the accounting cycle?
Answer: Establish links between different accounting periods of business.
Question-3: How many steps of the accounting cycle?
Question-4: What are the 10 steps of the accounting cycle?
Answer: Identifying Transactions, Analyzing Transactions, Journalizing, Transfer to Ledger, Preparing Trial Balance, Adjusting Entries, Prepare Worksheet, Preparation of Financial Statement, Closing Entry, and Post-closing Trial Balance or Opening Journal.
Question-5: Which task is called summarization in the accounting cycle?
Answer: Preparation of Trial Balance
Question-6: Which is the first step of the modern accounting cycle?
Answer: Identifying Transaction.
Question-7: Which step of the modern calculation cycle is used to verify the mathematical accuracy of the calculation?
Answer: The fifth step (Preparing Trial Balance)
Question-8: Which entry is prepared to close the revenue-expenditure account?
Answer: Closing Entry.
Question-9: Which entry is made for an accounting of arrears and advance income and expenditure?
Answer: Adjusting entry.
Question-10: What is Worksheet?
Answer: Worksheet is an optional multi-column statement.
Question-11: Which trial balance is made in the worksheet?
Answer: Adjusted Trial Balance.
Question-12: Who maintains continuity between previous and next year’s transactions?
Answer: Accounting cycle.
Question-13: Which is the last and optional step of the modern accounting cycle?
Answer: Opening Journal.
Question-14: Which task is called summarization in the accounting cycle?
Answer: Trial Balance.
Question-15: What is known through the ledger?
Answer: Balance of various accounts.
Question-16: Through which the financial status is known?
Answer: Balance sheet or financial statements.
Question-17: What is called “transfer” in the accounting cycle?
Answer: Prepare the ledger.
Question-18: When will the account be completed?
Answer: When transactions are recorded chronologically as debit and credit.
Question 19: What is the name of the book in which the transactions are initially recorded with a brief explanation of the debit and credit analysis?
Question-20: Which is the list of debit and credit balance of the ledger account?
Answer: Trial Balance.
Question-21: What is the objective of preparing a financial statement?
Answer: Determine the amount of profit & loss, total assets, and total liabilities and owner’s equity of the business.
Question-22: What are the basic requirements for analyzing financial statements?
Answer: Providing various information to the concerned party.
Question-23: Where are the nominal accounts transferred and the balance closed?
Answer: Income statement, expense statement.
Question-24: Which account needs to be closed at the end of the year?
Answer: Revenue Income, Revenue Expense, and Drawings account.
Question-25: Next accounting period starts with
Answer: The remaining balance of assets, liability, and owner’s equity account.
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