CPB / BookKeeping Bookkeeping Ledger 2 — Questions and Answers
Question 1: What is the purpose of a subsidiary ledger?
- To replace the general ledger
- To provide detailed records supporting a control account (Correct answer)
- To record only cash transactions
- To summarize annual financial data
Correct answer: To provide detailed records supporting a control account
A subsidiary ledger contains detailed records for individual accounts that are summarized in a corresponding control account in the general ledger.
Question 2: Which account in the general ledger corresponds to the accounts receivable subsidiary ledger?
- Accounts Payable control account
- Accounts Receivable control account (Correct answer)
- Revenue control account
- Cash control account
Correct answer: Accounts Receivable control account
The Accounts Receivable control account in the general ledger must equal the total of all individual customer balances in the accounts receivable subsidiary ledger.
Question 3: When is a ledger account said to have a 'zero balance'?
- When only credits have been posted
- When total debits equal total credits (Correct answer)
- When the account has no transactions
- When the account is closed permanently
Correct answer: When total debits equal total credits
A ledger account has a zero balance when the sum of all debit entries equals the sum of all credit entries, resulting in no net balance.
Question 4: In a standard T-account, where are credit entries recorded?
- Left side
- Right side (Correct answer)
- Center column
- Top of the account
Correct answer: Right side
Credit entries are always recorded on the right side of a T-account, while debit entries are recorded on the left side.
Question 5: What does 'posting' mean in bookkeeping?
- Mailing financial statements to stakeholders
- Transferring journal entry amounts to ledger accounts (Correct answer)
- Preparing the trial balance
- Adjusting entries at period end
Correct answer: Transferring journal entry amounts to ledger accounts
Posting is the process of transferring debit and credit amounts from journal entries to the corresponding accounts in the general ledger.
Question 6: Which of the following best describes a 'running balance' ledger format?
- A ledger that only shows year-end balances
- A ledger with separate debit, credit, and balance columns updated after each entry (Correct answer)
- A ledger used only for cash accounts
- A ledger that consolidates multiple accounts
Correct answer: A ledger with separate debit, credit, and balance columns updated after each entry
A running balance ledger (also called the balance-column format) shows the current account balance after each transaction is posted.
Question 7: If the accounts payable subsidiary ledger totals $15,000, what should the Accounts Payable control account balance be?
- $0
- $7,500
- $15,000 (Correct answer)
- It can differ if adjustments were made
Correct answer: $15,000
The Accounts Payable control account must always equal the total of all individual vendor balances in the accounts payable subsidiary ledger.
CPB / BookKeeping Bookkeeping Ledger 2
What is the purpose of a subsidiary ledger?