16 Questions
What is the purpose of the General Journal?
To keep track of all financial transactions by date
What type of transactions are recorded in the Cash Receipt Journal?
Client collections, interest payments, and cash sales
Which book provides a reconciled balance by summarizing an account's journal entries?
General Ledger
What is the purpose of the Cash Disbursement Journal?
To record cash outflows in businesses
Which type of journal is used to track a company's sales transactions?
Sales Journal
What does the General Ledger result from?
Combination of Special Journals and General Journals
What is the purpose of the Cash Receipt Journal?
Record cash inflows from payables and expenses
Which journal is used to record cash outflows in businesses?
Cash Disbursement Journal
What does the Sales Journal primarily track?
Company's sales transactions
Which book is the final record of entries that provides a reconciled balance?
General Ledger
What type of transactions are recorded in the General Journal?
Real-time financial operations by date
Which book is the result of combining Special Journals and General Journals?
'Book of Record'
What is the primary purpose of the General Ledger?
Provide a reconciled balance by summarizing journal entries
What distinguishes the Cash Receipt Journal from the Cash Disbursement Journal?
'Cash Receipt Journal tracks cash received; Cash Disbursement Journal tracks cash paid'
Which journal records transactions involving collection from customers?
Sales Journal
What does the General Journal follow in recording financial transactions?
Real-time transactions by date
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.
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.
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