General Ledger & Chart of Accounts Flashcards

What is the primary purpose of a chart of accounts?

Answer: To provide a systematic listing of all accounts used in the general ledger

A chart of accounts is an organized listing of all accounts used in the general ledger, providing a framework for recording financial transactions.

In double-entry bookkeeping, which account type normally carries a credit balance?

Answer: Liabilities

Liabilities normally carry credit balances because they represent amounts owed by the business, and credits increase liability accounts.

What is the general ledger in a bookkeeping system?

Answer: The master set of accounts that contains all financial transactions of a business

The general ledger is the master accounting record containing all account balances, with entries posted from journals and used to prepare financial statements.

Which type of account is increased by a debit entry?

Answer: Asset accounts

Asset accounts have a normal debit balance, so debit entries increase their balances and credit entries decrease them.

What is a subsidiary ledger?

Answer: A detailed ledger that supports and breaks down the balance of a controlling account in the general ledger

A subsidiary ledger provides transaction-level detail for individual accounts (such as each customer or vendor) that roll up to a controlling account in the general ledger.

Which of the following is considered a permanent (real) account?

Answer: Accumulated Depreciation

Accumulated Depreciation is a balance sheet account (a contra-asset) that carries its balance forward from period to period, making it a permanent account.

What is the normal balance for accounts payable in the general ledger?

Answer: Credit

Accounts payable is a liability account, and liabilities normally carry credit balances because credits increase liability account balances.