Question 1: The Primary Ledger That Contains All Of

Top Of Formquestion 1the Primary Ledger That Contains All Of The Balan

Question 1: The primary ledger that contains all of the Balance Sheet and Income Statement accounts is called:

• A) Subsidiary ledger
• B) General ledger
• C) T-account
• D) General journal

Question 2: The process of transferring journal entries to the ledger is called:

• A) Posting
• B) Crediting
• C) Journalizing
• D) Ledgering

Question 3: A subsidiary ledger:

• A) Groups together a small number of accounts with different characteristics
• B) Is the primary ledger that contains all of the Balance Sheet and Income Statement accounts
• C) Is a chart of accounts
• D) Groups together a large number of individual accounts with a common characteristic

Question 4: A trial balance:

• A) Proves that entries have been recorded correctly
• B) Verifies whether debits equal credits and that the accounting system is in balance
• C) Should only be done once per accounting period
• D) Is prepared with debits in the right column and credits in the left column

Question 5: Which of the following is used to incorporate the subsidiary ledger into the general ledger?

• A) Chart of accounts
• B) Posting
• C) Controlling account
• D) Journal entries

Question 6: The last step in preparing a trial balance requires:

• A) Adding columns together
• B) Listing all accounts and their balances used by the entity
• C) Debits on the right and credits on the left
• D) Comparing the debit total to the credit total

Question 7: On January 1, Johns & Company had an accounts receivable balance of $50,000 and a cash balance of $400,000. On January 7, Johns received $5,000 in cash from prior credit sales. What are the resulting account balances for accounts receivable and cash, respectively?

• A) $55,000 credit; $395,000 credit
• B) $45,000 credit; $400,000 debit
• C) $45,000 debit; $405,000 debit
• D) $55,000 debit; $395,000 debit

Question 8: Fargo Co. purchased a piece of equipment with a $100,000 note payable. Prior to this transaction, Fargo had no other notes payable, and its equipment account had a balance of $500,000. What are the account balances for notes payable and equipment after the purchase?

• A) Equipment: credit balance of $600,000; Notes Payable: debit balance of $100,000
• B) Equipment: debit balance of $600,000; Notes Payable: credit balance of $100,000
• C) Equipment: debit balance of $100,000; Notes Payable: credit balance of $100,000
• D) Equipment: credit balance of $100,000; Notes Payable: debit balance of $100,000

Fact Pattern for questions 9 and 10: In the current month, Cage Co. performed several transactions, including purchasing supplies worth $500 ($200 in cash, remaining on account), paying $5,000 payroll expense in cash, paying $1,000 interest on a note payable in cash, and selling marketable securities for $12,500 which was originally purchased for $10,000. Beginning cash balance was $10,000.

Question 9: Which of the following is the correct T-account presentation for Cage’s cash account at the end of the month?

• A) Beginning balance $10,000, Purchase of supplies $200 cash, Payment of payroll $5,000, Payment of interest $1,000, Sale of securities $12,500; Ending balance $6,300
• B) Beginning balance $10,000, Sale of securities $12,500, Purchase of supplies $200, Payment of payroll $5,000, Payment of interest $1,000; Ending balance $3,700
• C) Beginning balance $10,000, Purchase of supplies $200 cash, Payment of payroll $5,000, Payment of interest $1,000, Sale of securities for $12,500; Ending balance $16,300
• D) Beginning balance $10,000, Purchase of supplies $200 cash, Payment of payroll $5,000, Payment of interest $1,000; Ending balance $3,700

Question 10: Which beginning balances are missing from the information that are needed to compute the ending balances of all accounts affected by Cage’s transactions?

• A) I, II, IV, and VI only
• B) II, IV, and VI only
• C) I, II, IV, and V only
• D) I, II, III, IV, V, and VI

Paper For Above instruction

The intricacies of accounting systems fundamentally revolve around the core concepts of the general ledger, subsidiary ledgers, and the processes of recording and verifying transactions. In understanding the foundational structures of accounting, it is crucial to identify the primary ledger that collates all the accounts from the balance sheet and income statement. The general ledger serves this role, acting as the central repository for all financial data of an organization, ensuring a comprehensive overview that aids in financial reporting and analysis.

The process of transferring journal entries into the ledger is known as posting. This step is vital because it ensures that every financial transaction recorded in the journal reflects accurately within individual accounts in the ledger. Proper posting maintains the integrity of the accounting records, facilitating subsequent processes such as trial balance preparation and financial statement generation. An essential part of understanding the ledger system is distinguishing between the general ledger and subsidiary ledgers. While the general ledger maintains a summary of all accounts, subsidiary ledgers detail specific categories such as accounts receivable or accounts payable, grouped based on common characteristics.

A trial balance is an essential tool used periodically to verify that total debits equal total credits across all accounts. It confirms that the accounting entries are balanced and that the recording process is accurate. When preparing a trial balance, accountants list each account with its current balance, debits on one side, and credits on the other, then compare totals to detect discrepancies or errors. This process, while helpful, cannot reveal all inaccuracies but provides an important check on the integrity of the financial records.

The integration of subsidiary ledgers into the general ledger is managed through controlling accounts. These accounts serve as summary accounts in the general ledger that reflect the total of detailed subsidiary ledger accounts. This setup simplifies the overall accounting process, making it easier to monitor large volumes of individual transactions without losing the connection to detailed accounts.

Transactions in the ledger are finalized during the posting process, which involves transferring all journal entries into proper accounts with the correct debits and credits. The last step in preparing a trial balance involves listing all account balances, summing them, and verifying that the total debits match the total credits, thus ensuring the ledger’s accuracy for reporting purposes.

In analyzing practical cases like Johns & Company and Fargo Co., we see how specific transactions influence account balances. For example, receiving cash from credit sales reduces accounts receivable and increases cash. Similarly, purchasing equipment with a note payable increases both equipment assets and liabilities. Accurate recording of these transactions depends on proper understanding of debits, credits, and the effects on respective accounts. The problem scenarios illustrate how balances are affected and how accurate account management supports financial reporting.

Cage Co.’s transactions further exemplify the application of fundamental accounting principles. Changes involving cash, supplies, payroll, interest, and securities trading are meticulously recorded in the accounts. Properly documenting these transactions necessitates knowing the starting balances, which are often missing, requiring assumptions or additional data for precise calculations. The balancing act of debits and credits ensures that the accounting equation remains in equilibrium, preserving the fidelity of financial statements.

The concepts of abnormal balances, chart of accounts, control accounts, debits, credits, double-entry systems, and ledger forms are the backbone of sound bookkeeping practices. They collectively support the accurate, reliable, and consistent recording of an organization’s financial health. These principles underpin the ability to detect errors, prepare financial reports, and provide stakeholders with trustworthy data essential for decision-making.

References

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