Chapter 4 Flashcards
“The journal of original entry” is also called
The general journal
How are transactions recorded in the General Journal
Chronologically
Why is it important to include details and be clear?
To create an audit trail
When is a chart of accounts created?
When a business is formed.
What order are entries made in a General Journal
Debits first and then credits
True or False:
A compound entry is a journal entry that contains more than one debit or credit
True
In a compound journal entry, if two accounts are debited, must two accounts be credited?
No. The only requirement is that the total debits = the total credits.
Why are check and invoice numbers included in the journal entry descriptions?
For the audit trail
The record of final entry is also called the General ________
Ledger
Which step of the accounting cycle is posting in the General Ledger?
The second step
Each page of the General Journal has a number. Where do you put that number in the General Ledger?
Post Ref
(Posting Reference)
When you add to your General ledger individual accounts, what action should you do in the General Journal?
Add account numbers to the transactions as a last step to verify that all steps have been done.
Which ledger keeps a running balance?
The General Ledger. Each account’s value is increased or decreased by the transactions
What is the order of General Ledger Accounts?
Assets
Liabilities
Owner’s Equity
Revenue
Expenses
Which of these steps are NOT appropriate when correcting a journal or ledger entry?
If an error is discovered before posting - neatly cross out the incorrect item and write the correct data above it.
If an error is discovered after posting, erase the error or scratch it out.
Error discovered after posting: cross out the error and add the new information below the error
Erase the error or scratch it out.
