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Quizzes > Business & Finance > Finance & Economics

Test Your Skills with Our General Ledger Questions Quiz

Ready for a general ledger quiz? Challenge your ledger management skills now!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art style infographic showing ledger book chart coins and upward arrow on dark blue background for general ledger quiz

This general ledger quiz helps you review ledger adjustments, posting entries, and chart of accounts basics. Use it to check gaps before a test so you know what to study next. Want extra practice on accounts? Try the chart of accounts practice .

Which primary financial statement is directly prepared from the ending balances in the general ledger?
Balance Sheet
Income Statement
Statement of Changes in Equity
Cash Flow Statement
The general ledger contains all account balances at period end, which are used to prepare the Balance Sheet showing assets, liabilities, and equity. Other statements like the Income Statement require additional calculations of revenues and expenses from the ledger. The Balance Sheet is directly tied to the closing balances in the ledger.
What is the purpose of a chart of accounts in a general ledger system?
To reconcile bank statements
To record journal entries
To calculate depreciation
To list all account titles and numbers used by an organization
A chart of accounts is a structured listing of all account names and their unique numbers, enabling consistent posting and reporting. It functions as the backbone for recording transactions in the general ledger. Without a chart of accounts, transaction categorization would be disorganized.
Which type of account is 'Accounts Payable' typically classified as?
Revenue
Equity
Liability
Asset
Accounts Payable represents obligations a company must pay to suppliers and is recorded under liabilities in the general ledger. It increases with credits and decreases with debits. Correct classification ensures accurate financial statements.
In double-entry bookkeeping, each financial transaction must affect how many accounts at minimum?
One account
Four accounts
Three accounts
Two accounts
Double-entry accounting requires that every transaction impacts at least two accounts with equal debits and credits, ensuring the accounting equation stays balanced. This principle underlies all postings to the general ledger. It helps detect errors if debits and credits do not match.
Which book records transactions in chronological order before posting to the general ledger?
General Journal
General Ledger
Trial Balance
Cash Book
Transactions are first recorded in the general journal in date order, including descriptions and debit/credit amounts, then posted to the general ledger by account. This journal ensures a complete audit trail. Posting from the journal provides structure for ledger accounts.
What is the main purpose of a trial balance in general ledger accounting?
To reconcile bank accounts
To prepare cash flow statements
To test the equality of total debits and total credits
To record adjusting entries
A trial balance lists all ledger account balances to ensure that total debits equal total credits after posting journal entries. It helps detect posting errors before preparing financial statements. While it doesn't catch all types of errors, it's a critical internal check.
Which type of account normally carries a debit balance?
Revenues
Expenses
Liabilities
Equity
In the accounting equation, expense accounts increase on the debit side and normally carry debit balances. Revenues, liabilities, and equity normally have credit balances. Understanding normal balances is essential for correct postings.
When a company pays cash for rent, which entry is made in the general ledger?
Debit Cash, Credit Rent Payable
Debit Cash, Credit Rent Expense
Debit Rent Expense, Credit Cash
Debit Rent Payable, Credit Cash
Paying rent in cash decreases the asset Cash (credit) and increases the expense Rent Expense (debit). This reflects outflow of funds for operating costs. Correct debit and credit application keeps the ledger balanced.
Accumulated Depreciation is classified in the general ledger as which type of account?
Liability
Contra asset
Expense
Asset
Accumulated Depreciation is a contra asset account that offsets the related fixed asset account on the Balance Sheet. It carries a credit balance, reducing the net book value of assets. Proper classification ensures transparency of asset cost versus accumulated wear.
Which section of the general ledger includes capital contributions and retained earnings?
Assets
Liabilities
Equity
Expenses
Owners' equity section of the general ledger includes accounts such as Common Stock, Additional Paid-in Capital, and Retained Earnings. These accounts represent owner claims on company assets. Equity balances are reported on the Balance Sheet.
What is the purpose of an adjusting entry in accrual accounting?
To close temporary accounts
To update revenues and expenses to the period they occur
To record transactions in the cash basis
To allocate payments to prepaid expenses only
Adjusting entries ensure that revenues and expenses are recognized in the period they are earned or incurred under accrual accounting. They record accruals, deferrals, depreciation, and allowances. Without adjustments, financial statements would misstate financial position and performance.
Which adjusting entry records accrued revenue at period end?
Debit Revenue, Credit Accounts Receivable
Debit Cash, Credit Revenue
Debit Accounts Receivable, Credit Revenue
Debit Revenue, Credit Deferred Revenue
Accrued revenue is recognized when earned but not yet billed or received, so you debit Accounts Receivable (asset) and credit Revenue. This aligns income recognition with the period earned. It ensures receivables and revenue are correctly stated.
Which of the following is a contra account to Accounts Receivable?
Bad Debt Expense
Allowance for Doubtful Accounts
Accounts Payable
Accumulated Depreciation
Allowance for Doubtful Accounts is a contra asset account that reduces gross Accounts Receivable to net realizable value. It estimates uncollectible receivables. Bad Debt Expense records the cost when specific accounts are written off.
Why are reversing entries used after adjusting entries?
To replace closing entries
To eliminate all accruals and deferrals permanently
To facilitate simpler recording of routine transactions in the new period
To adjust for bank reconciling items
Reversing entries are optional entries made at the start of a new period to reverse certain adjusting entries, simplifying the recording of subsequent related transactions. They help avoid double counting of accrued revenues or expenses. They have no impact on final financial statements if applied correctly.
What is a subsidiary ledger?
A detailed ledger supporting a general ledger control account
A summary of all journal entries
An external financial report
The same as a general journal
A subsidiary ledger contains individual accounts that support a control account in the general ledger, such as Accounts Receivable or Accounts Payable. It provides detailed transaction history for each customer or vendor. The control account summarizes the total of subsidiary balances.
Which report reconciles the balance of a control account with its subsidiary ledger?
Schedule of Accounts Receivable
Trial Balance
Income Statement
Bank Reconciliation
A Schedule of Accounts Receivable lists individual customer balances and is compared to the Accounts Receivable control account in the general ledger for reconciliation. It ensures the totals match and identifies discrepancies. This process maintains ledger accuracy.
Under straight-line depreciation, how is annual depreciation expense calculated?
Cost divided by Salvage Value
(Cost minus Salvage Value) divided by Useful Life
(Cost plus Salvage Value) divided by Useful Life
Cost multiplied by Useful Life
Straight-line depreciation spreads the cost of an asset evenly over its useful life by subtracting salvage value from cost and dividing by the useful life. This yields a constant annual depreciation expense. The ledger reflects this expense and accumulated depreciation each period.
What does the posting reference (PR) column in a journal indicate?
The transaction date
The dollar amount of the entry
The approval signature
The ledger account number where the entry was posted
The posting reference column in a journal shows the account number from the general ledger to which each journal entry has been posted. It creates a cross-reference for audit trails and error checking. It confirms that posting is complete and accurate.
Which type of account is closed to Income Summary at period end?
Contra accounts
Control accounts
Real accounts (assets and liabilities)
Nominal accounts (revenues and expenses)
Nominal accounts, which include revenues and expenses, are closed to the Income Summary to reset their balances for the next period. Real accounts (assets, liabilities, equity) carry their ending balances forward. Closing nominal accounts ensures income determination is period-specific.
How are multi-currency transactions typically recorded in the general ledger?
At the year-end exchange rate only
At the previous period's closing rate
At a fixed monthly rate set by management
At the exchange rate on the transaction date
Multi-currency transactions are recorded at the current exchange rate on the transaction date to reflect the correct value in the functional currency. Subsequent remeasurement uses period-end rates for monetary items. This approach aligns with IAS 21 and GAAP guidelines.
Which entry records amortization of an intangible asset?
Debit Amortization Expense, Credit Accumulated Amortization
Debit Accumulated Amortization, Credit Intangible Asset
Debit Intangible Asset, Credit Cash
Debit Intangible Asset, Credit Amortization Expense
Amortization expense for intangible assets is debited to Amortization Expense and credited to Accumulated Amortization, a contra-asset account. This parallels depreciation of tangible assets and spreads cost over useful life. The ledger reflects net book value accordingly.
What is the purpose of a cumulative roll forward of a control account?
To prepare trial balance only
To convert cash to accruals
To close temporary accounts
To track beginning balance plus net changes over periods
A cumulative roll forward shows the opening balance of a control account, additions and subtractions during the period, and the ending balance. It's used for accounts like Fixed Assets or Inventory to reconcile subsidiary ledgers. It provides transparent movement history.
In a perpetual inventory system, how are inventory purchases recorded?
Debit Purchases, Credit Inventory
Debit Inventory, Credit Accounts Payable or Cash
Debit Accounts Payable, Credit Cost of Goods Sold
Debit Cost of Goods Sold, Credit Inventory
Under a perpetual inventory system, each purchase increases the Inventory account directly (debit) and increases Accounts Payable or decreases Cash (credit). Cost of Goods Sold is updated at each sale, not at purchase. This provides real-time inventory tracking.
How are intercompany transactions eliminated in consolidation ledgers?
By adjusting only foreign currency translation
By debiting and crediting elimination entries matching intra-group balances
By netting to zero in the subsidiary ledger
By ignoring subsidiary entries
In consolidation, intercompany receivables and payables are eliminated via entries that debit and credit the respective control accounts to zero out intra-group balances. Sales and cost of goods sold between group companies are also offset. This prevents double counting revenues and expenses.
Which method helps detect posting errors using the trial balance?
Using bank reconciliation
Two-column trial balance with running totals
Dollar error test using modulus 9
Comparing petty cash vouchers
The dollar error test or digital root method (modulus 9) is a mathematical technique to detect transposition and slide errors in trial balances. It compares the digital roots of totals to find discrepancies. While not foolproof, it is a useful control.
What is the key purpose of reconciling a subsidiary ledger to its control account?
To prepare financial statements
To verify that individual balances sum to the control account balance
To calculate depreciation
To determine tax liabilities
Reconciling a subsidiary ledger to its control account ensures that the sum of detailed accounts (e.g., customer balances) equals the total reflected in the general ledger. This process identifies discrepancies such as missing or duplicate entries. It is critical for ledger accuracy and audit readiness.
Under IFRS, how are non-current assets revalued in the general ledger?
By adjusting the asset account to fair value and crediting revaluation surplus
By crediting retained earnings directly
By using the historical cost model only
By debiting accumulated depreciation only
IFRS allows the revaluation model where non-current assets are carried at fair value, with increases credited to a revaluation surplus in equity. Depreciation is subsequently based on the revalued amount. This adjustment goes directly to the ledger asset account.
Which entry records deferred (unearned) revenue when cash is received in advance?
Debit Deferred Revenue, Credit Cash
Debit Cash, Credit Deferred Revenue
Debit Revenue, Credit Cash
Debit Cash, Credit Revenue
When cash is received before delivering goods or services, you debit Cash (asset) and credit Deferred Revenue (liability) to reflect the obligation. Revenue is recognized later when the performance obligation is met. This ensures correct period recognition.
In a multi-entity consolidation, what is the proper general ledger treatment for unrealized intercompany profit in inventory?
Eliminate profit by debiting sales elimination and crediting cost of goods sold
Transfer profit to retained earnings
Recognize profit in equity section
Leave profit until inventory is sold to outside parties
Unrealized intercompany profit must be eliminated in consolidation by reducing sales and cost of goods sold to remove intra-group margins. This prevents overstating income and inventory value. The elimination entry ensures consolidated financials reflect only external transactions.
How should foreign currency translation adjustments be recorded under IFRS in the general ledger?
As a deferred tax asset
In the Income Statement immediately
Directly in retained earnings
In Other Comprehensive Income until disposal of the foreign operation
Under IFRS (IAS 21), translation differences for the net investment in a foreign operation are recognized in Other Comprehensive Income and accumulated in a separate equity reserve until disposal. They are reclassified to profit or loss upon sale of the operation. This preserves historic local currency performance.
What mechanism in an ERP-based general ledger ensures a complete audit trail of transactions?
Random batch IDs
Sequential posting numbers with user and timestamp logs
Weekly backup reports
Manual journal registers
ERP systems assign sequential posting references for each transaction and log user IDs, dates, and times, creating an immutable audit trail. This ensures traceability from source documents through journals to ledgers. Such controls support compliance and internal audit processes.
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Study Outcomes

  1. Understand General Ledger Foundations -

    Grasp the key components and structure of a general ledger to navigate and answer general ledger questions effectively.

  2. Apply Ledger Adjustment Techniques -

    Implement common adjusting entries and reconcile balances to ensure accurate financial reporting.

  3. Analyze Transaction Posting Processes -

    Trace the flow of source documents to ledger entries and assess the impact on account balances.

  4. Differentiate Chart of Accounts Categories -

    Classify assets, liabilities, equity, revenue, and expenses to create a well-organized chart of accounts.

  5. Identify Multiple Tab Quiz Strategies -

    Leverage the structure of general ledger questions that contain multiple tabs to streamline quiz navigation and time management.

  6. Evaluate Ledger Management Practices -

    Critique common accounting ledger trivia and best practices to refine bookkeeping accuracy and control.

Cheat Sheet

  1. Chart of Accounts Structure -

    The chart of accounts organizes all ledger management questions by assigning a unique number to each asset, liability, equity, revenue, and expense category. According to FASB and IFRS guidelines, using a numeric mnemonic (1xx for assets, 2xx for liabilities, 3xx for equity, etc.) streamlines account identification. Practice mapping sample transactions to this structure for efficient recall during any general ledger quiz.

  2. Double-Entry Posting Mechanics -

    At the heart of every general ledger question is the double-entry system: every debit has a corresponding credit, ensuring the accounting equation (Assets = Liabilities + Equity) remains balanced. The mnemonic DEAD (Debit: Expenses, Assets, Draws; Credit: Liabilities, Equity, Revenues) helps you remember which side increases or decreases. Mastery of this principle is essential for acing accounting ledger trivia and accurately posting transactions.

  3. Adjusting Entries Essentials -

    Adjusting entries ensure revenues and expenses are recognized in the correct period, following accrual accounting and AICPA standards. Common adjustments include accruals, deferrals, and depreciation - calculated using formulas like (Cost - Residual Value) / Useful Life for straight-line depreciation. Regular practice with these adjustments boosts confidence in general ledger questions that contain multiple tabs.

  4. Trial Balance Reconciliation -

    A trial balance lists all ledger account balances to verify that total debits equal total credits, a key step before financial statement preparation. According to university accounting curriculums, any imbalance indicates posting errors or transposition mistakes - often traceable by dividing the error by nine. Implement this quick check when taking a general ledger quiz to catch mistakes early.

  5. Cross-Referencing Journals to Ledgers -

    Posting transactions accurately from the journal to the general ledger is critical, as outlined in official AICPA practice aids. Always use the journal folio (JF) and ledger folio (LF) columns to mark cross-references, ensuring traceability. This simple step enhances your speed in general ledger quiz environments and sharpens your ledger management questions skills.

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