CPB / BookKeeping Bookkeeping Ledger 5 — Questions and Answers
Question 1: Which scenario correctly describes a 'compound journal entry' affecting the ledger?
- One debit and one credit of equal amounts
- Multiple debits and/or credits where total debits equal total credits (Correct answer)
- An entry that spans two accounting periods
- An entry recorded only in the subsidiary ledger
Correct answer: Multiple debits and/or credits where total debits equal total credits
A compound journal entry involves more than two accounts (multiple debits and/or credits), but total debits must still equal total credits before posting to the ledger.
Question 2: A bookkeeper notices the trial balance is off by $270. This error is most likely due to:
- Transposition of digits (e.g., writing $720 instead of $270) (Correct answer)
- Omitting an entire transaction
- Posting to the wrong account
- Using the wrong accounting period
Correct answer: Transposition of digits (e.g., writing $720 instead of $270)
A difference divisible by 9 (270 ÷ 9 = 30) is a classic indicator of a transposition error where two digits were accidentally switched.
Question 3: In a ledger, the term 'cross-referencing' between the journal and ledger serves what purpose?
- To create a backup of all transactions
- To allow tracing entries between the journal and ledger for verification (Correct answer)
- To eliminate the need for a trial balance
- To automatically correct posting errors
Correct answer: To allow tracing entries between the journal and ledger for verification
Cross-referencing (writing journal page numbers in ledger and account numbers in journals) creates an audit trail allowing entries to be traced in both directions.
Question 4: When preparing a trial balance, which of the following accounts would appear on the credit side?
- Cash
- Prepaid Rent
- Notes Payable (Correct answer)
- Office Equipment
Correct answer: Notes Payable
Notes Payable is a liability account with a normal credit balance, so it appears on the credit side of the trial balance.
Question 5: What is the effect on the ledger when a business collects cash on account from a customer?
- Debit Cash; Credit Revenue
- Debit Cash; Credit Accounts Receivable (Correct answer)
- Debit Accounts Receivable; Credit Cash
- Debit Revenue; Credit Cash
Correct answer: Debit Cash; Credit Accounts Receivable
Collecting cash on account increases Cash (debit) and decreases the amount owed by the customer in Accounts Receivable (credit).
Question 6: Which account would typically appear in both the general ledger AND a subsidiary ledger?
- Cash
- Retained Earnings
- Accounts Payable (Correct answer)
- Depreciation Expense
Correct answer: Accounts Payable
Accounts Payable exists as a control account in the general ledger and is supported by individual vendor accounts in the accounts payable subsidiary ledger.
Question 7: After posting all closing entries to the ledger, which of the following accounts will still have a non-zero balance?
- Service Revenue
- Salaries Expense
- Accumulated Depreciation (Correct answer)
- Owner's Drawing
Correct answer: Accumulated Depreciation
Accumulated Depreciation is a permanent contra-asset account and retains its balance after closing; only temporary accounts (revenue, expenses, drawings) are closed to zero.
CPB / BookKeeping Bookkeeping Ledger 5
Which scenario correctly describes a 'compound journal entry' affecting the ledger?