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General Ledger & Chart of Accounts Flashcards

7 cards from real CPB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is the fundamental accounting equation that underpins general ledger bookkeeping?

    Answer: Assets = Liabilities + Owner's Equity

    The accounting equation Assets = Liabilities + Owner's Equity must always remain in balance and is the foundation of double-entry bookkeeping.

  2. What is the purpose of an adjusting entry in the general ledger?

    Answer: To update account balances for accruals, deferrals, and depreciation before preparing financial statements

    Adjusting entries ensure revenues and expenses are recognized in the correct accounting period under the accrual basis, updating accounts before financial statements are prepared.

  3. Which of the following is a temporary (nominal) account?

    Answer: Rent Expense

    Rent Expense is a temporary account that accumulates expenses during the period and is closed to retained earnings (or income summary) at period end.

  4. What happens to temporary account balances at the end of an accounting period?

    Answer: They are zeroed out through closing entries and their net effect is transferred to equity

    Closing entries zero out all temporary accounts (revenues, expenses, dividends) and transfer their net balance to retained earnings so the income statement starts fresh each period.

  5. What is a compound journal entry?

    Answer: An entry that involves more than one debit or more than one credit

    A compound journal entry involves two or more debits, two or more credits, or both, as long as total debits still equal total credits.

  6. Which general ledger account is used to accumulate the annual depreciation charge on fixed assets over their useful life?

    Answer: Accumulated Depreciation

    Accumulated Depreciation is a contra-asset account that builds up the total depreciation taken on an asset since it was placed in service, reducing the asset's book value.

  7. If a bookkeeper records a $500 cash purchase of office supplies, what is the correct general ledger entry?

    Answer: Debit Office Supplies $500; Credit Cash $500

    Purchasing supplies for cash increases the Office Supplies asset (debit) and decreases the Cash asset (credit), keeping the accounting equation in balance.