CPB General Ledger & Chart of Accounts 2

Question 1

What is the purpose of preparing a trial balance?

Accepted Answer

To verify that total debits equal total credits in the general ledger

Answer

A trial balance verifies the mathematical accuracy of the ledger by confirming that the sum of all debit balances equals the sum of all credit balances.

Question 2

What is a contra account in the general ledger?

Accepted Answer

An account paired with another account to reduce its net balance

Answer

A contra account has a normal balance opposite to its paired account and is used to reduce the net value reported, such as Accumulated Depreciation reducing the book value of assets.

Question 3

When should closing entries be recorded in the general ledger?

Accepted Answer

At the end of each accounting period to zero out temporary accounts

Answer

Closing entries are made at the end of each accounting period to transfer balances from temporary accounts (revenues, expenses, dividends) to retained earnings.

Question 4

Which of the following accounts would be classified as an asset in the chart of accounts?

Accepted Answer

Prepaid Insurance

Answer

Prepaid Insurance is a current asset because it represents a future economic benefit (insurance coverage) already paid for.

Question 5

What does 'posting' mean in the context of general ledger bookkeeping?

Accepted Answer

Transferring transaction data from journals to the appropriate general ledger accounts

Answer

Posting is the process of transferring debit and credit amounts from journal entries to the respective T-accounts in the general ledger.

CPB - Certified Public Bookkeeper Practice Test

CPB - Certified Public Bookkeeper Practice Test

CPB General Ledger & Chart of Accounts 2