Ledger Accounting
Overview
Every business transaction leaves two footprints, not one. Buy inventory for cash and the business has less cash but more stock; sell on credit and it has less inventory but a customer who now owes money. The ledger is where both footprints get recorded, side by side, so nothing ever goes missing.
In this lesson you will learn what the nominal, receivables and payables ledgers are for, and how to apply the rules of double entry to post transactions into individual accounts and balance them.
Objectives
- Explain the purpose of the nominal ledger, receivables ledger and payables ledger
- Record transactions in ledger accounts using double entry principles
Mind map
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Flashcards
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Lesson Note
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Lesson Evaluation
Congratulations on completing the lesson on Ledger Accounting. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- Which ledger holds an individual account for each credit customer? A) Nominal ledger B) Receivables ledger C) Payables ledger D) Cash book Answer: B
- Under the rules of double entry, which side of the account records an increase in an asset? A) Debit B) Credit C) Either side D) Neither side Answer: A
- A business pays a supplier $400 by cheque. Which entry is correct? A) Debit Bank, Credit Payables B) Debit Payables, Credit Bank C) Debit Payables, Credit Purchases D) Debit Bank, Credit Sales Answer: B
- A cash account has an opening debit balance of $4,000. During the month it receives $1,200 and pays out $900. What is the closing balance? A) $4,300 B) $4,200 C) $5,900 D) $2,300 Answer: A
- Which of the following increases with a credit entry? A) Non-current assets B) Drawings C) Capital D) Purchases Answer: C
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