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 the Accounting Cycle.
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: The main purpose of the accounting cycle is to establish links between different accounting periods of business.
Question-3: How many steps are there in the accounting cycle?
Answer: There are ten (10) steps in the accounting cycle.
Question-4: What are the accounting cycle’s 10 steps?
Answer: The accounting cycle’s 10 steps are as follows:
- Identifying Transactions.
- Analyzing Transactions.
- 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: The summarization phase in the accounting cycle is the preparation of the trial balance.
Question-6: Which is the first step of the modern accounting cycle?
Answer: The first step of the modern accounting cycle is identifying transactions.
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) is used to verify the mathematical accuracy of the calculation.
Question-8: Which entry is prepared to close the revenue-expenditure account?
Answer: Closing Entry is prepared to close the revenue-expenditure account.
Question-9: Which entry is made for an accounting of arrears and advance income and expenditure?
Answer: Adjusting entry is made for an accounting of arrears and advance income and expenditure
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: The accounting cycle maintains continuity between previous and next year’s transactions.
Question-13: Which is the last and optional step of the modern accounting cycle?
Answer: Opening Journal is the last and optional step of the modern accounting cycle.
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 are known through the ledger.
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 balances 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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