Understanding Ledger Posting Basics

Front

What is a Chart of Accounts?

Back

A list of all the accounts used by a business in its financial transactions

Answer explanation

A Chart of Accounts is a list of all the accounts used by a business in its financial transactions, providing a framework for organizing financial data. The other options describe different financial reports or records.

Front

Which of the following is typically included in a Chart of Accounts? Employee names, Customer addresses, Product descriptions

Back

Account numbers

Answer explanation

A Chart of Accounts typically includes account numbers, which are used to categorize financial transactions. Employee names, customer addresses, and product descriptions are not standard components of this chart.

Front

What is the primary purpose of the General Journal?

Back

To record all financial transactions in chronological order

Answer explanation

The primary purpose of the General Journal is to record all financial transactions in chronological order, ensuring accurate tracking of a company's financial activities.

Front

What does the term "posting" refer to in accounting?

Back

Transferring journal entry information to the ledger

Answer explanation

In accounting, "posting" refers to transferring journal entry information to the ledger. This process updates the ledger accounts with the data recorded in the journal, making it essential for accurate financial tracking.

Front

What is a Post Reference Number used for?

Back

To link journal entries to ledger accounts

Answer explanation

A Post Reference Number is primarily used to link journal entries to ledger accounts, ensuring accurate tracking and organization of financial transactions.

Front

Which of the following best describes an Account Number? Options: A unique identifier for each transaction, A code that represents a specific account in the Chart of Accounts, A number that indicates the amount of a transaction, A reference for the date of a transaction

Back

A code that represents a specific account in the Chart of Accounts

Answer explanation

An Account Number is best described as a code that represents a specific account in the Chart of Accounts, distinguishing it from other identifiers like transaction numbers or amounts.

Front

In a Chart of Accounts, what type of account is typically assigned a number starting with "1"?

Back

Asset

Answer explanation

In a Chart of Accounts, accounts starting with '1' are typically classified as Asset accounts. This numbering convention helps in organizing financial statements and tracking resources owned by the business.

Front

Which of the following is an example of a ledger posting? Options: Recording a sale in the sales journal, Transferring a credit entry from the journal to the accounts payable account in the general ledger, Calculating the total expenses for the month, Preparing a bank reconciliation statement

Back

Transferring a credit entry from the journal to the accounts payable account in the general ledger

Answer explanation

The correct choice is transferring a credit entry from the journal to the accounts payable account in the general ledger, as this action represents a ledger posting, moving data from journals to ledgers.

Front

What information is typically included in a ledger entry?

Back

Date, account number, and amount

Answer explanation

A ledger entry typically includes the date of the transaction, the account number affected, and the amount involved. This information is essential for accurate financial record-keeping.

Front

What is the purpose of using account numbers in a Chart of Accounts?

Back

To ensure each account is uniquely identified and easily referenced

Answer explanation

The purpose of using account numbers in a Chart of Accounts is to ensure each account is uniquely identified and easily referenced, facilitating accurate record-keeping and reporting.