Chapter 3: The General Ledger

What is a ledger account?

• A record of all financial transactions of a business

• An accounting record showing all transactions affecting a particular item

• A document used to summarize a company's financial position

• A list of all the accounts in the General Ledger

What is the General Ledger?

• A list of all accounts in the Trial Balance

• The main group of ledger accounts

• A financial report showing all revenue and expenses

• A bank statement showing all transactions

What is the most basic form of a ledger account?

• Balance Sheet

• Income Statement

• T-form account

• Cash Flow Statement

Which side of a ledger account does an asset increase appear on?

• Credit side

• Debit side

• Either side

• Neither side

How do liabilities and owner's equity increase in a ledger account?

• On the debit side

• On the credit side

• By reducing assets

• By increasing expenses

How does revenue affect owner's equity?

• It decreases owner's equity

• It has no impact on owner's equity

• It increases owner's equity

• It increases liabilities

How are expenses recorded in the General Ledger?

• As a debit entry because they decrease owner’s equity

• As a credit entry because they increase revenue

• As a credit entry because they decrease assets

• As a debit entry because they increase liabilities

What is the purpose of a Trial Balance?

• To check if debits equal credits

• To determine the financial position of a business

• To record all business transactions

• To calculate net income

Which of the following errors will NOT be revealed by a Trial Balance?

• A transaction omitted altogether

• A different amount recorded on each side

• Only one entry recorded for a transaction

• Two entries recorded on the same side

What is footing in accounting?

• The process of preparing financial statements

• A formal process to balance all accounts at the end of the period

• An informal process to calculate the balance of an account at any time

• A method for recording double-entry transactions