4. Ledger Accounts

Question 1

What are the main steps to prepare Financial statements?

Answer 1

1. Record transaction ‘double entry’
2. Transfer entities into relevant ledger accounts
3. Balancing off ledger accounts
4. Transfer balances to trial balances
5. Prepare the final statement

Question 2

What is a nominal ledger account?

Answer 2

It contains a record of all the payments, expenses, and assets of the business, while also containing all the information you need to compile financial reports like profit and loss and the balance sheet.

Question 3

What must a nominal ledger account need to be?

Answer 3

Summarize all the accounts into these
Must be balanced on each

Question 4

How to balance off a ledger?

Answer 4

By adding all accounts and minus from the other side. This surplus will be noted by the ‘Balancing fig’

Question 5

What is a trial balance?

Answer 5

A financial report showing the closing balances of all accounts in the general ledger at a point in time
- Should be =