Tag: explain the concept of ledger and its importance in accounting process.

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Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

It is a check on the accuracy of posting. If the trial balance agrees it proves that - 
1. The books are arithmetically accurate 
2. Both the aspects of the transactions have correctly recorded in the books of original entry as well as in the ledger. 
The correct answer is ___________________.

  1. $1$ but not $2$

  2. $2$ but not $1$

  3. Both $1$ & $2$

  4. Either $1$ or $2$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A trial balance only checks the arithmetic accuracy of the ledger balances. It does not guarantee that transactions were recorded in the correct accounts or that the original entries were conceptually correct.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which of the following involves the preparation of reports and statements from the classified data (ledger) understandable and useful to management and other interested parties? 

  1. Classifying

  2. Recording

  3. Summarizing

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Summarizing is the stage in the accounting cycle where ledger balances are used to prepare financial statements and reports for management. Recording is the initial entry, and classifying involves posting to the ledger.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Ledger book is popularly known as ____________.

  1. Secondary book of accounts

  2. Principal book of accounts

  3. Subsidiary book of accounts

  4. None of above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The ledger is referred to as the principal book of accounts because it contains all the final accounts of a business, whereas the journal is the book of original entry.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are ______________________.

  1. Balanced but not transferred to profit and loss account .

  2. Not balanced and also the balance is not transferred to the profit and loss account.

  3. Balanced and the balance is transferred to the balance sheet.

  4. Not balanced and their balance is transferred to the profit and loss account.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Nominal accounts represent revenues and expenses. At the end of the year, these accounts are closed by transferring their balances to the profit and loss account to determine net income.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

The total of the amount of the bills payable book is posted to the _____ in the ledger.

  1. Dr. of bills payable account

  2. Cr. of bills payable account

  3. Cr. of bills receivable account

  4. Dr. of bills receivable account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Bills payable is a liability. The total of the bills payable book represents an increase in liabilities, which is recorded on the credit side of the bills payable account.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

At the end of the accounting year all the nominal accounts of the ledger book are _________________.

  1. Balanced but not transferred to profit and loss account

  2. Not balanced and also the balance is not transferred to the profit and loss account

  3. Balanced and the balance is transferred to the balance sheet

  4. Not balanced and their balance is transferred to the profit and loss account
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

This is a duplicate of question 425066 with identical content and answer. Nominal accounts are not balanced at year-end. Their balances are transferred to the Trading and Profit and Loss Account to determine profit or loss.

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Credit creation power of the commercial banks gets limited by which of the following?

  1. Banking habits of the people

  2. Cash Reserve Ratio

  3. Credit policy of the central bank

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Commercial banks' ability to create credit is constrained by the central bank's policies, the required reserve ratios (CRR), and the public's banking habits (cash preference).

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Which of the following statements best explains the relationship between journal and ledger?

  1. First recording in journal and then positing to ledger completes the double entry of the transaction

  2. The journal is the book of original entry, where as the ledger is the book of second entry

  3. The journal is the book for analytical record and ledger is the book for chronological record

  4. The process of recording, in the journal is called journalising, the process of recording in the ledger is called posting
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Book of original entry refers to journal where all the business transactions are recorded first in chronological order whereas ledger is a book which records all journal entries in individual ledger account. 

Multiple choice elements of book keeping and accountancy ledger and posting explain the concept of ledger and its importance in accounting process. introduction to ledgers ledgers

Ledger Folio and index is necessary for ledger.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A ledger folio is the page number or folio number that is recorded in the L.F. column in the journal. It includes the page number of the ledger book on which the relevant account appears. 

An index is the list of all ledger accounts that is maintained in alphabetical order, indicating the page number of each ledger account. 
A ledger book contains various pages and an index helps in finding out any ledger account. Therefore, the ledger folio and index are necessary for a ledger.