ACCT 427 - CH.18 EXAM QUESTIONS
WITH COMPLETE ANSWERS { GRADED
A+}
What is a General Ledger? - ✔✔It tracks financial transactions from the five
business process cycles and generates reports of ending balance financial data for
every asset, liability, equity, revenue & expense GL accounts on this information
for external and internal users.
Is the General Ledger updated in real-time processing? - ✔✔Usually it's batch
processing, so in periods the accounting system will consolidate all business
process cycles with the data it's been accumulating.
What is the Chart of Accounts? - ✔✔Listing of all general ledger accounts with
their brief description.
What are Journals? - ✔✔Individual Journal Entry activity grouped by coming
from a similar source/cycle.
, What are Subsidiary ledgers (sub-ledger)? - ✔✔Individual Journal Entry activity
for one GL account broken into sub-accounts (A/P Subsidiary ledger lists all
payables, organized by vendors).
What are the two types of journal entries? - ✔✔Specialized and General Journals
What is a specialized journal? - ✔✔Records large numbers of repetitive
debits/credits. Ex: Sales Journal, Cash Disbursement Journal, Payroll Journal and
etc.
What is a general journal? - ✔✔Records infrequent/non-routine journal entry
actions. Anything that doesn't fall into a specialized journal will be a general
journal entry.
What is a suspense account? - ✔✔An account that doesn't fall under an asset,
liability, or equity. It's a neutral account that's used as a place holder for the proper
GL account and has to be closed at the end of the period. It can't have a balance at
the end of the year.
Why do we use suspense accounts? - ✔✔If there isn't a GL account to properly
record a transaction and so waiting for the GL account number to be created or if a
certain employee doesn't have access to record a transaction under a certain GL
account number (ex: not everyone can record revenue).
WITH COMPLETE ANSWERS { GRADED
A+}
What is a General Ledger? - ✔✔It tracks financial transactions from the five
business process cycles and generates reports of ending balance financial data for
every asset, liability, equity, revenue & expense GL accounts on this information
for external and internal users.
Is the General Ledger updated in real-time processing? - ✔✔Usually it's batch
processing, so in periods the accounting system will consolidate all business
process cycles with the data it's been accumulating.
What is the Chart of Accounts? - ✔✔Listing of all general ledger accounts with
their brief description.
What are Journals? - ✔✔Individual Journal Entry activity grouped by coming
from a similar source/cycle.
, What are Subsidiary ledgers (sub-ledger)? - ✔✔Individual Journal Entry activity
for one GL account broken into sub-accounts (A/P Subsidiary ledger lists all
payables, organized by vendors).
What are the two types of journal entries? - ✔✔Specialized and General Journals
What is a specialized journal? - ✔✔Records large numbers of repetitive
debits/credits. Ex: Sales Journal, Cash Disbursement Journal, Payroll Journal and
etc.
What is a general journal? - ✔✔Records infrequent/non-routine journal entry
actions. Anything that doesn't fall into a specialized journal will be a general
journal entry.
What is a suspense account? - ✔✔An account that doesn't fall under an asset,
liability, or equity. It's a neutral account that's used as a place holder for the proper
GL account and has to be closed at the end of the period. It can't have a balance at
the end of the year.
Why do we use suspense accounts? - ✔✔If there isn't a GL account to properly
record a transaction and so waiting for the GL account number to be created or if a
certain employee doesn't have access to record a transaction under a certain GL
account number (ex: not everyone can record revenue).
