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Questions and Answers
What is the purpose of the General Journal?
What type of transactions are recorded in the Cash Receipt Journal?
Which book provides a reconciled balance by summarizing an account's journal entries?
What is the purpose of the Cash Disbursement Journal?
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Which type of journal is used to track a company's sales transactions?
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What does the General Ledger result from?
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What is the purpose of the Cash Receipt Journal?
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Which journal is used to record cash outflows in businesses?
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What does the Sales Journal primarily track?
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Which book is the final record of entries that provides a reconciled balance?
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What type of transactions are recorded in the General Journal?
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Which book is the result of combining Special Journals and General Journals?
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What is the primary purpose of the General Ledger?
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What distinguishes the Cash Receipt Journal from the Cash Disbursement Journal?
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Which journal records transactions involving collection from customers?
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What does the General Journal follow in recording financial transactions?
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Study Notes
Types of Journals
- General Journal, also known as the Book of Original Entry, records all financial transactions by date and is used to track real-time transactions.
- It follows the general debit and credit principle and is the first book to document business transactions.
General Ledger
- The General Ledger, also known as the final book of entries, provides a reconciled balance by summarizing an account's journal entries.
- It tracks resources, liabilities, incomes, costs, and company salaries.
- It is the result of Special Journals and General Journals combined.
Cash Receipt Journal
- Cash Receipt Journal records all cash payments made to cover expenses and collect receivables.
- Examples of cash receipt entries include asset sales, cash sales, client collections, interest payments, and rent payments.
Cash Disbursement Journal
- Cash Disbursement Journal records cash outflows in businesses, including cash payments for payables and expenses.
- It helps update the general ledger and provides professionals with an understanding of the company's payment status.
Sales Journal
- Sales Journal is used to record all sales made by a company, including goods and other products.
- It is a specific type of journal used to keep track of a company's sales.
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Description
Learn the key differences between the General Journal and General Ledger in accounting. Understand the purposes and functions of each book in tracking financial transactions and summarizing account balances.