ACCOUNTING 2ND TERM 2026 1. Auditing requires A. Preparing budget B. Procedure of recording transactions C. Counting inventory D. Auditing records

Here are the solutions to the questions:

1) Accounting involves the systematic recording, classifying, summarizing, and interpreting of financial transactions. * B) Procedure of recording transactions

2) A source document provides the original evidence of a transaction. An invoice is a common source document for credit sales or purchases. * B) Invoice

3) Subsidiary books are the initial books where transactions are recorded from source documents, also known as books of original entry or daybooks. * B) Books of original entry/Daybooks

4) The main purpose of subsidiary books is to provide the first chronological record of transactions from source documents before they are posted to the ledger. * B) First record from source docs

5) All cash receipts and payments, including bank transactions, are recorded in the Cash Book. * C) Cash book

6) Credit sales, which are sales made on credit, are recorded in the Sales Journal. * B) Sales journal

7) Credit purchases, which are purchases made on credit, are recorded in the Purchases Journal. * B) Purchases journal

8) Credit notes issued to customers indicate that goods have been returned by customers, which are sales returns. These are recorded in the Sales Returns Journal. * A) Sales returns

9) Credit notes received from suppliers indicate that goods have been returned to suppliers, which are purchases returns. These are recorded in the Purchases Returns Journal. * B) Purchases returns

10) A petty cash book is used to record small, day-to-day cash expenses. * C) Small expenses

11) The General Journal is used to record transactions that do not fit into any other specialized journal (like the cash book, sales journal, or purchases journal). * C) Transactions not in other day books

12) After transactions are initially recorded in the subsidiary books (journals), they are then transferred or posted to the respective Ledger accounts. * B) Ledger accounts

13) A ledger is typically divided into main sections such as the General Ledger, Sales Ledger (for debtors), and Purchases Ledger (for creditors). * B) 3

14) The Purchases Ledger (also known as the Creditors Ledger) contains individual accounts for each credit supplier. * B) Credit suppliers

15) The Sales Ledger (also known as the Debtors Ledger) contains individual accounts for each credit customer. * B) Credit customers

16) The Cash Book serves as both a book of original entry (journal) for cash and bank transactions and also as a ledger account for cash and bank, making it a subsidiary ledger for these accounts. * C) Subsidiary ledger cash/bank

17) The General Ledger contains all accounts that are not maintained in the Sales Ledger or Purchases Ledger, as well as summary control accounts for debtors and creditors. * C) All other accounts + summaries

18) The Purchases Ledger records transactions related to credit suppliers. * B) Credit suppliers

19) The Sales Ledger records transactions related to credit customers. * C) Credit customers

20) A trial balance is a list of all the debit and credit balances extracted from the ledger accounts after they have been balanced, prepared to check the arithmetic accuracy of the ledger. * B) List of balances after balancing

21) Credit sales are first recorded in the Sales Journal. * B) Sales journal

22) Credit purchases are first recorded in the Purchases Journal. * C) Purchases journal

23) The General Journal is used to record transactions that do not fit into any other specialized journal. * C) Transactions not in other day books