Podcast
Questions and Answers
What is a ledger?
What is a ledger?
What is a general ledger?
What is a general ledger?
A ledger that contains all accounts needed to prepare financial statements
What is the purpose of an account number?
What is the purpose of an account number?
The number assigned to an account
What does file maintenance involve?
What does file maintenance involve?
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What does opening an account mean?
What does opening an account mean?
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What is posting in accounting?
What is posting in accounting?
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What does proving cash refer to?
What does proving cash refer to?
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What is a correcting entry?
What is a correcting entry?
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An account form has columns for the debit and credit balance of an account.
An account form has columns for the debit and credit balance of an account.
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The asset division accounts for TechKnow Consulting are numbered in the 200's.
The asset division accounts for TechKnow Consulting are numbered in the 200's.
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The cash account is the first asset account labeled 200.
The cash account is the first asset account labeled 200.
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The second division of TechKnow Consulting's chart of accounts is owner equity.
The second division of TechKnow Consulting's chart of accounts is owner equity.
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The last two digits in a 3-digit account number indicate the general ledger division of the account.
The last two digits in a 3-digit account number indicate the general ledger division of the account.
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Journal errors discovered before entries are posted are corrected by preparing a memorandum describing the correction.
Journal errors discovered before entries are posted are corrected by preparing a memorandum describing the correction.
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Each amount in the debit and credit columns of a general journal is posted to the account in the Account Title column.
Each amount in the debit and credit columns of a general journal is posted to the account in the Account Title column.
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Recording and posting reference is always the last step in the posting procedure.
Recording and posting reference is always the last step in the posting procedure.
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In which division are assets classified?
In which division are assets classified?
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What is the account number for cash?
What is the account number for cash?
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What does the account number 300 refer to?
What does the account number 300 refer to?
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Cash can be proved at any time.
Cash can be proved at any time.
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Study Notes
Accounting Basics
- A ledger is a collection of accounts used to track financial transactions.
- The general ledger includes all accounts necessary for preparing financial statements.
- An account number uniquely identifies each account within the ledger.
Account Management
- File maintenance involves organizing accounts, assigning numbers, and ensuring records are up-to-date.
- When opening an account, the account title and number are recorded at the top of the account entry.
- Posting is the process of transferring data from a journal to the relevant ledger account.
Cash Management
- Proving cash ensures that the cash amount matches the reported balance in accounting records.
- Discrepancies can be corrected through a correcting entry, which amends previous journal entries.
True/False Concepts
- Accounts form typically feature debit and credit columns and are known as balance-ruled accounts.
- Accounts in the asset division are designated numbers in the 100 series, while the cash account is the first and labeled 100.
- Owner equity is not the second division; it is represented with account numbers starting from 300.
- The last two digits of a 3-digit account number do not indicate the general ledger division but rather account type.
- Expense accounts in the general ledger are arranged according to their account number, not chronologically.
Posting Procedures
- Each entry in the journal's debit and credit columns is linked to a specific account by notation in the Account Title.
- The Post.Ref. columns are crucial for tracking which journal entries need posting.
- A missing reference in the Post.Ref. column indicates that posting is pending.
- The posting procedure includes documenting the transaction date in the account's date column.
Balancing Accounts
- When credits exceed debits in an account, the balance becomes a credit.
- Cash balances can be verified at any time through reconciliation with the checkbook.
Correcting Entries
- Errors identified before journal entries are posted require a memorandum to describe the needed corrections.
- Correcting entries follow the same procedural steps as standard journal entries.
Account Numbering
- Asset accounts begin at 100, followed by specific categories:
- 110: Cash
- 120: Accounts Receivable
- 140: Supplies
- 150: Prepaid Insurance
-
200 represents liabilities, starting with:
- 210: Accounts Payable
-
300 reflects owner's equity, with:
- 310: Capital
- 320: Drawing Account
- Revenue is categorized under account numbers beginning at 400, specifically:
- 410: Sales
- 500 accounts categorize expenses.
Studying That Suits You
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Description
Test your knowledge with these flashcards covering key terms from Chapter 4 of accounting. Learn the meanings of important concepts like ledger, general ledger, account number, and file maintenance. Perfect for reinforcing your understanding of the foundational aspects of accounting.
