Bookkeeping & General Ledger Flashcards
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Read the first 7 Bookkeeping & General Ledger flashcards as text
Which of the following best describes a subsidiary ledger?
Answer: A detailed ledger that supports a control account in the general ledger
A subsidiary ledger provides detailed records that support and reconcile to a control account in the general ledger.
When a company receives payment in advance for services not yet performed, the initial journal entry is:
Answer: Debit Cash, Credit Unearned Revenue
Cash received before services are rendered is a liability (Unearned Revenue), so Cash is debited and Unearned Revenue is credited.
What is the purpose of a trial balance?
Answer: To verify that total debits equal total credits in the ledger
A trial balance lists all ledger accounts and their balances to confirm that total debits equal total credits after posting.
Under the accrual basis, revenue is recognized when:
Answer: It is earned, regardless of when cash is received
Accrual accounting recognizes revenue when earned (performance obligation met), not when cash changes hands.
A bookkeeper notices that a $500 credit was posted to Accounts Payable but should have gone to Notes Payable. This error is called a:
Answer: Error of commission
An error of commission occurs when an entry is made to the correct side but the wrong account of the same category.
Which account would be found in the accounts payable subsidiary ledger?
Answer: Individual vendor balances
The accounts payable subsidiary ledger contains a separate record for each vendor showing amounts owed.
The entry to record depreciation expense for the period is:
Answer: Debit Depreciation Expense, Credit Accumulated Depreciation
Depreciation Expense is debited and Accumulated Depreciation (a contra-asset) is credited to allocate asset cost over its useful life.