ABA Bookkeeping & General Ledger 2

Question 1

Which of the following best describes a subsidiary ledger?

Accepted Answer

A detailed ledger that supports a control account in the general ledger

Answer

A subsidiary ledger provides detailed records that support and reconcile to a control account in the general ledger.

Question 2

When a company receives payment in advance for services not yet performed, the initial journal entry is:

Accepted Answer

Debit Cash, Credit Unearned Revenue

Answer

Cash received before services are rendered is a liability (Unearned Revenue), so Cash is debited and Unearned Revenue is credited.

Question 3

What is the purpose of a trial balance?

Accepted Answer

To verify that total debits equal total credits in the ledger

Answer

A trial balance lists all ledger accounts and their balances to confirm that total debits equal total credits after posting.

Question 4

Under the accrual basis, revenue is recognized when:

Accepted Answer

It is earned, regardless of when cash is received

Answer

Accrual accounting recognizes revenue when earned (performance obligation met), not when cash changes hands.

Question 5

A bookkeeper notices that a $500 credit was posted to Accounts Payable but should have gone to Notes Payable. This error is called a:

Accepted Answer

Error of commission

Answer

An error of commission occurs when an entry is made to the correct side but the wrong account of the same category.

(ABA) Accredited Business Accountant Practice Test