Chapter 4 concepts

Front

What is a chart of accounts?

Back

A list of all accounts used by a business

Answer explanation

A chart of accounts is a list of all accounts used by a business to organize financial transactions. It helps in tracking and reporting financial data, making it the correct choice among the options provided.

Front

What does a compound entry affect?

Back

More than two accounts

Answer explanation

A compound entry affects more than two accounts because it involves multiple transactions that impact various accounts simultaneously, unlike single entries that affect only one account.

Front

What is a correcting entry used for?

Back

To correct an incorrect entry

Answer explanation

A correcting entry is specifically used to fix an incorrect entry in the accounting records. This ensures that the financial statements reflect accurate information, making 'To correct an incorrect entry' the correct choice.

Front

What is the purpose of a cross reference in accounting?

Back

To link the journal and ledger

Answer explanation

The purpose of a cross reference in accounting is to link the journal and ledger, ensuring that all transactions are accurately recorded and can be traced between these two essential components of the accounting system.

Front

What is a general ledger?

Back

A complete set of all accounts used by a business

Answer explanation

A general ledger is a complete set of all accounts used by a business, which includes assets, liabilities, equity, revenues, and expenses. It serves as the main accounting record, summarizing all financial transactions.

Front

What is the function of a general ledger?

Back

To accumulate a record of debits and credits

Answer explanation

The general ledger serves to accumulate a record of debits and credits made to each account as a result of entries made in the general journal

Front

What is journalizing?

Back

Entering transactions in a journal

Answer explanation

Journalizing refers to the process of entering transactions in a journal, which is the first step in the accounting cycle. This choice accurately defines the term, while the other options describe different accounting activities.

Front

What is posting in accounting?

Back

Copying debits and credits from the journal to the ledger

Answer explanation

Posting in accounting refers to the process of copying debits and credits from the journal to the ledger, which is essential for maintaining accurate financial records.

Front

What is a slide error?

Back

An error when amounts slide a digit or two

Answer explanation

A slide an error that occurs when debit or credit amounts slide a digit or two to the left or right.

 

Front

What is a source document?

Back

A document providing information about a business transaction

Answer explanation

A source document is essential as it provides detailed information about a business transaction, serving as the primary evidence for recording in accounting. The other options do not accurately define a source document.