Tag: ledger and posting

Questions Related to ledger and posting

The main books of accounts in a business is ____________.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Account

  2. Journal

  3. Ledger

  4. Subsidiary books

Show answer
Correct Option: C
Explanation:

The book of original entry or prime entry is journal in which all day to day transactions are recorded. All the transactions from journal are posted to ledger which consists of different accounts on the basis of transactions recorded in journal. 

Hence, it is regarded as the second important stage in the accounting process and also considered as the main books of account.

Which of the following books serves both as journal and ledger?

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Cash book

  2. Sales Return book

  3. Sales journal

  4. Purchase returns book

Show answer
Correct Option: A
Explanation:

Cash book is a book which contains records about the receipt and payments of the firm. It also deals with all the bank deposits as well as withdrawals made. Entries in the cash book made are posted into general ledger so that cash in hand or cash at bank can be ascertained. It is the same as journal and then posting into ledger. Hence, cash book serves both as journal and ledger.

Every financial transaction is recorded first in the journal.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

A transaction is recorded first in a journal because journal provides complete details of a transaction in one entry. 

Further, a journal forms the basis for posting the transactions into their respective accounts into ledger. 
Transactions are recorded in journal in chronological order, i.e. in the order of occurrence with the help of source documents. 
Journal is known as 'book of original entry', because with the help of source document, transactions are originally recorded in books. The process is of recording the transactions in journal and then in ledger.

Left hand side of an account is ________.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Debit side

  2. Credit side

  3. Income side

  4. Expenses side

Show answer
Correct Option: A
Explanation:

Debt and credit are two important terms used in Book-keeping and Accountancy. These two terms form the very basis of recording transactions in the books of accounts. 

Left hand side of the account is called debit side. Hence, to debit an account means to record the transaction on the left hand side of the account. It is abbreviated as 'Dr.' The word 'debit' is originated from the Latin word 'Debitum' and it means what is due.
Whenever an asset increases, or equity or a liability decreases, a debit entry will be made in the appropriate account. Whenever an asset decreases, or equity or a liability increases, a credit entry will be made in the appropriate account. the difference between the two sides of an account can be calculated. This difference is called the balance of an account.

Transferring journal entry from journal to ledger is called journalising. 

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

The process of recording transaction in the book of original entry is known as Journalising. The transactions are recorded in the form of a journal entry. Recording is made following the double-entry system of accounting. Thus, it records the two-fold effect of every transaction in the process of journalising, the transaction is first analysed in order to decide the account to be debited and credited by ascertaining the rule of debit and credit. After this, entries are recorded in the books of accounts. Once the entry is recorded in books, it is further posted from the journal to the ledger accounts which is called posting of entries.

Posting implies recording of a transaction in journal.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. True

  2. False

Show answer
Correct Option: B
Explanation:

Posting is when the balances in sub ledger and the general journal are shifted into the general ledger. It is not at all the recording of a transaction in journal. 

Brokerage paid on sale of goods is debited to Brokerage A/c.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Brokerage is a fee or commission paid to a broker who is engaged in business in buying or selling shares and securities. 

Hence, it is an indirect expense for a business that is to be accounted under Brokerage A/c. 
Being an expense for the business, it should be debited to Profit and Loss A/c, according to the rule of nominal account.

The accounting entries passed to transfer balance from the closed account to another account are called transfer entries, e.g. transfer of net profit to Capital A/c.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

Transfer entries, are entries intended to transfer an item from one head of account to another. 

Transfer entries are passed in the journal for transferring an account from one account to another account. E.g. Drawing account is transferred to Capital account at the end of the accounting year. Accounts relating to operation of business like sales, income, expenses are closed at the end of the year and their total or balances are transferred to Trading and Profit and Loss Account after recording journal entries.

Right hand side of an account is __________.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. credit side

  2. debit side

  3. income side

  4. expenses side

Show answer
Correct Option: A
Explanation:

All the accounts identified on the basis of transactions recorded in different journals/books such as Cash Book, Purchase Book, Sales Book etc. will be opened and maintained in a separate book called Ledger. So a ledger book; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained. It is a complete set of accounts of a business enterprise. 

A ledger account has two sides, namely left hand and right hand side. Left hand side is called the debit side while the right hand side is called the credit side.

Recording of an entry from journal to ledger is called as __________.

elements of book keeping and accountancy ledger and posting distinction between subsidiary books and ledger explain the meaning of ledger posting methods of posting entries

  1. Balancing

  2. Posting

  3. Totalling

  4. Transferring

Show answer
Correct Option: B
Explanation:

The process of recording transactions in the journal is called Journalizing. Once journalizing process is completed, the journal entry provides a complete and useful description of the event's effect on the organisation. 


The process of transferring journal entry to individual accounts is called posting.