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Accounting: Erroneous Posting to the Ledger

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Accounting: Erroneous Posting to the Ledger

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Questions and Answers

What are adjusting entries?

Adjusting entries are entries made prior to the preparation of financial statements to update certain accounts so that they reflect correct balances as of the designated time.

What is the purpose of adjusting entries?

a. To take up unrecorded income and expense of the period. b. To split mixed accounts into their real and nominal elements.

Define Real Accounts and Nominal Accounts.

a. Real Accounts (Permanent accounts) – accounts that are not closed at the end of the accounting period. b. Nominal Accounts (Temporary accounts) – accounts that are closed at the end of the accounting period.

What is journalizing in accounting?

Recording an identified accountable event in the journal by means of a journal entry. Signup and view all the answers

Differentiate between a simple and compound journal entry.

A simple journal entry contains a single debit and a single credit element, while a compound journal entry contains two or more debits or credits. Signup and view all the answers

What is the third step in the accounting cycle?

Posting Signup and view all the answers

Define internal events in accounting.

Events that do not involve an external party. Signup and view all the answers

What is the purpose of posting in accounting?

To transfer data from the journal to the appropriate accounts in the ledger. Signup and view all the answers

Give an example of a transaction that requires posting in the ledger.

Transaction: Jan. 8 - Services worth ₱30,000 were rendered for cash. Signup and view all the answers

What is the concept of duality in the double-entry system?

Each transaction is recorded in two parts - debit and credit. Signup and view all the answers

How are contra accounts presented in financial statements?

Contra accounts are presented as deductions to their related accounts. Signup and view all the answers

Explain the concept of equilibrium in accounting.

Each transaction is recorded with equal debits and credits. Signup and view all the answers

What is the purpose of using double-entry system in accounting?

To ensure accurate recording of transactions and maintain the balance in the accounting equation. Signup and view all the answers

How are adjunct accounts presented in financial statements?

Adjunct accounts are presented as additions to their related accounts. Signup and view all the answers

What are the normal balances of accounts in accounting?

Assets and Expenses have debit balances, Liabilities, Equity, and Revenues have credit balances. Signup and view all the answers