Answers to Comprehensive Sell Review at Discussion Questions 1. What is posting?

Question

Answers to Comprehensive Sell Review at Discussion Questions 1. What is posting? 2. What is a ledger? 3. In what order are accounts arranged in the general ledger? Why 4. What are posting references? Why are they used? 5. What is the purpose of a journal? 6. What is the value of having a description for each general journal entry? 7. What procedure is used to record an entry in the general journal? 8. What is a compound journal entry? 9. How should corrections be made in the general journal? 10. What is an audit trail? Why is it desirable to have an audit trail? 11. What is the accounting ovcle?

Explanation / Answer

1) In accounting, posting can be defined as the act of moving debit and credit account balances from individual journals to their corresponding ledgers. However it has to be noted that transfers the total balance in a sub-ledger into the general ledger, and does not transfers individual transactions in the sub-ledger.

2) A ledger can be defined as the principal book or computer file for recording and totaling of economic transactions that can be measured in monetary unit of account by account type, with debits and credits posted in separate columns and also displaying the beginning monetary balance and ending monetary balance for each account. The purpose of ledger is as follows:

-- Summarizing transactions for each account at one place

-- To know debit or credit balance for each account

-- Assist in reconciling balances with third parties

-- Knowing business assets and liabilities

3) While placing financial information in the general ledger, accounts are generally place in the order that they appear in the chart of accounts. Thus each charted accounted is number and then firstly follows the order of listing assets and afterwards followed by liabilities, owner’s equity, revenues, and expenses

4) A posting reference column refers to a column in the general journal that is used to display when transaction have been posted to the ledger accounts. It is used in the posting process; and facilitates referencing between the journal and the ledger.

5) Journal is prepared to keep a systematic record of financial transactions. It's purpose are
-- To reflect financial transactions in chronological order.
-- To show necessary information about the financial transactions.
-- Acts as a legal evidence of financial transactions.
-- facilitate the preparation of a ledger

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