Which Of The Following Is Recorded In The Cash Payments Journal And Cash Receipts Journal? A. Adjusting Entry For Accrued Salaries | MCQ Solutions

Solutions To Multiple Choice Questions (MCQs)

The correct answer is (b), as Cash Payments Journal is used to record cash payment transactions only. “Payment of employees’ Salaries” is a cash payment transaction in which cash account and salaries accounts are involved. Cash is going out of the business (outflows) due to the payment of salaries made to employees during the current accounting period. It is recorded in the credit side of cash payment journal as when cash is decreased we credit it and the reason of decreasing of cash is salaries are recorded in Account Debited column.

All the cash payments in which cash paid are recorded in the cash payment journal. Payments made by cheque / check are also recorded in it. It has credit side and debit side. Examples include purchased merchandise for cash, payment to suppliers / vendors, expenses paid, loan payments, etc.

Adjusting entries, which update the balances of Deferrals And Accruals, do not involve cash account, so these are not recorded in it. Cash receipts are recorded in Cash Receipts Journal.

Which Of The Following Is Recorded In The Cash Receipts Journal?

The correct answer is b), as in Cash Receipts Journal only those Business Transactions are recorded in which cash is received by the business. All the receipts such as cash sales, cash received from customers, revenue received, etc., are recorded in this journal. Adjusting entry for depreciation does not involve any cash receipts (even it does not include any cash account i.e., such entry includes non cash items), so this is not recorded in cash receipts journal.