CPB General Ledger & Chart of Accounts 3

Question 1

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

Accepted Answer

Assets = Liabilities + Owner's Equity

Answer

Revenue – Expenses = Net Income

Answer

Debits + Credits = Zero

Answer

Cash Inflows – Cash Outflows = Net Cash

Question 2

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

Accepted Answer

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

Answer

To correct a posting error made in a prior period

Answer

To close temporary accounts to retained earnings

Answer

To reconcile subsidiary ledgers to controlling accounts

Question 3

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

Accepted Answer

Rent Expense

Answer

Accounts Receivable

Answer

Retained Earnings

Answer

Long-term Debt

Question 4

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

Accepted Answer

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

Answer

They are carried forward to the next period unchanged

Answer

They are transferred to the balance sheet as current liabilities

Answer

They are reversed and re-entered at the start of the next period

Question 5

What is a compound journal entry?

Accepted Answer

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

Answer

An entry recorded in two separate journals simultaneously

Answer

An entry made to correct errors in a previous period

Answer

An entry that spans multiple accounting periods

Question 6

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

Accepted Answer

Accumulated Depreciation

Answer

Depreciation Expense

Answer

Asset Impairment Reserve

Answer

Fixed Asset Write-off

Question 7

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

Accepted Answer

Debit Office Supplies $500; Credit Cash $500

Answer

Debit Cash $500; Credit Office Supplies $500

Answer

Debit Office Supplies Expense $500; Credit Accounts Payable $500

Answer

Debit Cash $500; Credit Supplies Expense $500