About Ledger

A trial balance is used in a general ledger to verify the debit and credit balances of each account in the record. An operational company's accounting records are kept in this system, which maintains all of the account information necessary for the preparation of its financial statements. Assets, liabilities, owners' equity, income, and costs are separated into accounts based on the kind of transaction.

Salient Features of Ledger

  • Using a double-entry accounting system, the general ledger is the foundation of a business.
  • To create financial statements like the balance sheet and the income statement, general ledger accounts must include all of the transaction data necessary for their preparation.
  • A summary of transactions performed as journal entries to sub-ledger accounts is called a general ledger transaction.
  • A trial balance is a report that includes each general ledger account and its balance, making it easy to review adjustments and find errors.

Purpose of maintaining ledger

When it comes to keeping track of a company's transactions, an accounting general ledger is essential. Assets, liabilities, income, costs, and owner's equity are the categories in which transactional data is structured inside a general ledger. Once each and every sub-ledger is tallied and closed, the accountant goes on to prepare a trial balance. The trial balance data is then used to construct financial statements for the company, including the balance sheet, statement of cash flows, income statement, and other financial reports.

Following are some of the multiple choice questions on the Ledger with answers that will help the students in developing their knowledge.

Ledger MCQ

1. From which of the following is a ledger account prepared.

  • Transactions
  • Journal
  • Events
  • None of the above

2. Ledger is a principal book that contains.

  • Real accounts only
  • Personal accounts only
  • All accounts
  • Nominal accounts only

3. Among these, which item is used as the base for preparing trial balance?

  • Cash account
  • Balance sheet
  • Journal
  • Ledger account

4. The ledger column that links the entry with the journal is called as.

  • J.F column
  • L.F column
  • Credit column
  • Debit column

5. A general ledger account that summarises all revenue and expenses for a reporting period is the ....

  • Capital account
  • Bank account
  • Profit and Loss Summary
  • Profit Account

6. Dequan's Car Detailing had cash sales of $840 yesterday. So far he has had $39,600 in Sales and has $2,788 in his Cash account. After posting what wiil be the new GL balances?

  • Credit Sales $40,440; Debit Cash $3,628
  • Debit Sales $40,440; Credit Cash $3,628
  • Credit Sales $35,760; Debit Cash $1,948
  • Debit Sales $35,760; Credit Cash $1,948

7. Bill Stone, owner, makes a $2,000 draw when there was $14,330 in the Cash account. There wa $34,500 in the Capital account. He would post thus to the General Ledger as

  • $2,000 Credit Bill Stone, Draw; $2,000 Debit Cash
  • $2,000 Debit Bill Stone, Draw; $2,000 Credit Cash
  • $2,000 Credit Bill Stone, Capital; $2,000 Debit Bill Stone. Draw
  • $2,000 Debit Bill Sone, Capital; $2,000 Credit Bill Stone Draw

8. The General Ledger (p. 94)

  • pages must all have an account balance >0
  • can have more than one account on a page if space permits
  • should be updated at least once a month
  • should have a page fof each account listed in the chart of accounts

9. If a debit is posted to an asset account, the amount of the debit (p. 98)

  • will be subtracted from the previous balance to determine the new debit account balance
  • will be added to the previous balance to determine the new debit account balance
  • will be subtracted from the previous balance to determine the new credit account balance
  • will be added from the previous balance to determine the new credit account balance

10. If a credit is posted to a liability account, the amount of the credit (p. 99)

  • will be added to the previous account balance to determine the new credit balance
  • will be subtracted from the previous account balance to determine the new credit balance
  • will be added to the previous account balance to determine the new debit balance
  • will be subtracted from the previous account balance to determine the new debit balance

11. A ledger is a (p. 94)

  • group of accounts
  • form to enter transactions in chronological order
  • business paper from which information is obtained for an entry
  • a document used to record sales

12. A schedule that contains all accounts needed to prepare financial statements (p. 94)

  • General Journal
  • General Ledger
  • All Sales Invoices
  • Source Documents

13. Debtor returned damage goods $77 + $7 GST write back = $77. Cost of good sold is $35. Choose the INCORRECT ledger for this transaction.

  • Inventory Details Credit $ Details Date Feb 2 Accounts Payable 16 Cost of sales Debit $ 2,900 Date Feb 6 13 35 Accounts Payable 60 Cost of sales 350 28 Balance c/d 2,525 2,935 1 Mar 2,935 Balance b/d 2,525
  • Date Details Debit $ Date Sales Feb 13 Credit $ Details Accounts receivable 700
  • GST payable Debit $ Date 7 Feb 13 Date Feb 16 Details Accounts receivable Details Accounts receivable Credit $ 70
  • Date Feb 13 Details Cost of sales Debit $ Date Details Credit $ Inventory 35 350 Feb 16 Inventory

14. Sold good on credit $700 + $70 GST = $770. Cost of good sold is $350. Choose the correct ledgers for this transaction.

  • Date Details Debit $ Date Sales Feb 13 Credit $ Details Accounts receivable 700
  • Inventory Details Credit $ Details Date Feb 2 Accounts Payable 16 Cost of sales Debit $ 2,900 Date Feb 6 13 35 Accounts Payable 60 Cost of sales 350 28 Balance c/d 2,525 2,935 1 Mar 2,935 Balance b/d 2,525
  • Date Feb 13 Details Cost of sales Debit $ Date Details Credit $ Inventory 35 350 Feb 16 Inventory
  • All of above

15. Purchased inventory on credit $2,900 + $290 GST = $3,190. Choose the correct ledgers for this transaction.

  • All of above
  • Date Details Accounts Payable Debit $ Date Details Feb 6 66 3,190 Inventory/GST credits Feb 2 Inventory/GST credits Credit $
  • Inventory Details Credit $ Details Date Feb 2 Accounts Payable 16 Cost of sales Debit $ 2,900 Date Feb 6 13 35 Accounts Payable 60 Cost of sales 350 28 Balance c/d 2,525 2,935 1 Mar 2,935 Balance b/d 2,525
  • Date Feb 2 Details Accounts Payable 290 Feb 6 Accounts Payable 6 Debit $ Date Details GST credits Credit $

16. Which side of the ledger would increase capital?

  • Debit
  • Credit

17. Which side of ledger would increase drawings?

  • Debit
  • Credit

18. Which side of the ledger would increase an expense?

  • Debit
  • Credit

19. Sales Returns ledger is closed to:

  • debit side of profit and loss ledger
  • credit side of profit and loss ledger

20. Which three accounts are balanced (bal c/d and b/d) at the end of the reporting period?

  • Liabilities
  • Assets
  • Equity
  • All of above

21. The ledger that is a summary of all income and expenses is the:

  • Capital
  • Equity
  • Profit and Loss
  • Income statement

22. Drawings is classified as...

  • Expense
  • Negative Equity
  • Asset
  • Liability

23. Business paid for electricity $660 inclusive GST. Calculate GST.

  • 60
  • $60.5

24. The process of transferring of items from a journal to their respective ledger accounts is called as.

  • Entry
  • Arithmetic
  • Balancing
  • Posting

25. A ledger is called a book of.

  • Primary entry
  • Final entry
  • Original entry
  • None of the above

26. Which of the following items would NOT appear in the P/L Summary account

  • Capital
  • Net Profit
  • Revenues
  • Expenses

27. Which of the following items would not appear on the credit side of the Inventory Account

  • Cost of Sales
  • Accounts Payable
  • Bank
  • Advertising

28. Which of the following titles is incorrect in the Accounts Payable Ledger

  • Inventory/GST Clearing
  • Bank/Discount Revenue
  • Purchase Returns/GST Clearing
  • Bank

29. Which of the following titles would not appear in the Inventory Account

  • Drawings
  • Cost of Sales
  • Advertising
  • Accounts Receivable

30. Which of the following items would appear on the Debit side of the GST Clearing Account if an amount was owed to the ATO

  • Accounts Payable/Bank/Bank/Accounts Receivable
  • Accounts Payable/Bank/Accounts Receivable/Accounts Payable
  • Accounts Receivable/Accounts Payable/Bank/Bank/Accounts Receivable
  • Accounts Payable/Bank/Bank/Balance

31. What is the debit entry required to recognize Unearned Sales Revenue as being earned

  • Bank
  • Unearned Revenue
  • Unearned Sales Revenue
  • Sales

32. When creating an allowance for doubtful debts what is the debit entry in the General Journal

  • Bad Debts
  • Accounts Receivable
  • Allowance for Doubtful Debts
  • Doubtful Debts

33. What credit entry is required when the business writes off a bad debt

  • Bad Debts
  • Accounts Receivable
  • Doubtful Debts
  • Allowance for Doubtful Debts

34. Which of the following are incorrect titles in the Disposal of Van account

  • Accumulated Depreciation
  • Trade-in
  • Loss on Disposal
  • All of the above

35. Which of the following would be the correct entries for the credit side of the inventory account

  • Bank/Accounts Payable/Cost of Sales/Advertising/Drawings/Inventory Loss/Inventory Write Down
  • Bank/Accounts Receivable/Cost of Sales/Advertising/Drawings/Inventory Loss/Inventory Write Down
  • Accounts Payable/Cost of Sales/Advertising/Drawings/Inventory Loss/Inventory Write Down
  • Accounts Payable/Cost of Sales/Accounts Receivable/Advertising/Drawings/Inventory Loss/Inventory Write Down

36. Select the correct set of titles to be recorded in the credit side of the Inventory Account

  • Bank/Accounts Payable/Cost of Sales/Inventory Gain
  • Bank/Accounts Payable/Cost of Sales/Inventory Loss/Inventory Write Down
  • Bank/Accounts Payable/Cost of Sales/Inventory Loss/Inventory Write Down/Advertising/Drawings
  • Accounts Payable/Cost of Sales/Inventory Loss/Inventory Write Down/Advertising/Drawings

37. Which of the following titles would not appear in the Accounts Receivable Account

  • Sales Returns/GST Clearing
  • Bad Debts
  • Sales/GST Clearing
  • Bank

38. Which of the following items is an incorrect title in the Accounts Receivable Ledger

  • Bank/Discount Expense
  • Sales Returns/GST Clearing
  • Cost of Sales
  • Sales/GST Clearing

39. A bad debt has been written off during the period as the Accounts Receivable has been declared bankrupt. The correct entry in the Allowance for Doubtful Debts ledger would be

  • Credit: Bad Debts
  • Debit: Accounts Receivable/GST Clearing
  • Debit: Bad Debts
  • Debit: Accounts Receivable

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