Posting to Ledger Quiz: True or False Edition

Q1. Posting is the process of recording transactions initially in the general journal.

• Answer: False

• Rationale: Journalizing is the process of recording transactions initially in the journal. Posting is the subsequent step where those recorded entries are transferred to the ledger accounts.

Q2. The General Ledger is often referred to as the “book of original entry.”

• Answer: False

• Rationale: The general journal is the “book of original entry” because transactions are recorded there first. The ledger is known as the “book of final entry.”

Q3. A ledger account contains a running total or continuous balance of that specific account.

• Answer: True

• Rationale: Unlike the journal, which lists transactions chronologically across all accounts, the ledger organizes information by individual accounts, showing an updated balance after each entry.

Q4. Entering the ledger account number in the journal’s Post. Ref. column indicates that the posting for that line item is complete.

• Answer: True

• Rationale: The account number acts as a confirmation or cross-reference. Leaving it blank typically indicates that the line item has not yet been posted to the ledger.

Q5. If a debit to Cash is mistakenly posted as a credit to Cash, the Trial Balance totals will still be equal.

• Answer: False

• Rationale: Shifting a debit to a credit on one side without a matching error on the other side changes the total debits and credits unequally, causing the trial balance to be out of balance.

Q6. Every ledger account has a left side called the debit side and a right side called the credit side.

• Answer: True

• Rationale: By universal accounting convention, “Debit” refers strictly to the left side of a T-account or ledger account, and “Credit” refers to the right side.

Q7. Posting a credit entry to the Accounts Payable ledger account will increase its balance.

• Answer: True

• Rationale: Accounts Payable is a liability account. Liabilities have a normal credit balance, meaning credits increase them and debits decrease them.

Q8. If an entire journal entry is completely omitted during the posting process, the trial balance will still balance.

• Answer: True

• Rationale: Since both equal debit and credit amounts are missing from the ledger, the overall mathematical equality of debits and credits remains intact, though the balances will be understated.

Q9. A transposition error occurs when a decimal point is misplaced during posting (e.g., posting $780 as $78).

• Answer: False

• Rationale: Misplacing a decimal point is a “slide error.” A “transposition error” occurs when the order of two adjacent digits is reversed (e.g., posting $780 as $870).

Q10. The modern standard ledger uses a “four-column” format to keep track of both running debit and credit balances.

• Answer: True

• Rationale: The four-column ledger format contains a Date column, Explanation column, Post Ref column, Debit, Credit, and two columns for the running balance (Debit Balance / Credit Balance).

Q11. Temporary accounts, such as Revenues and Expenses, maintain their ledger balances from year to year without ever being reset.

• Answer: False

• Rationale: Temporary accounts are reset to zero at the end of each fiscal period through closing entries. Only permanent accounts (Assets, Liabilities, and Equity) carry balances forward.

Q12. The notation “J5” in the Post. Ref. column of a ledger account stands for “January 5th.”

• Answer: False

• Rationale: “J5” is a cross-reference meaning “General Journal, Page 5.”

Q13. Posting to subsidiary ledgers changes the total balance of the corresponding control account in the General Ledger immediately in a manual system.

• Answer: False

• Rationale: In a manual system, subsidiary ledgers are updated individually, and the General Ledger control account is updated later via a summary or total posting. In automated software, it happens instantly.

Q14. An automated accounting system eliminates the conceptual need for a general ledger.

• Answer: False

• Rationale: Software automates the process of posting, but the ledger structure itself remains vital as the database storing account balances used to generate financial statements.

Q15. Assets, Expenses, and Dividends accounts all have a normal debit balance in the ledger.

• Answer: True

• Rationale: These three account types are increased by debits, so their healthy, active balances in the ledger are naturally debit balances.

Q16. If a transaction is posted to the wrong asset account (e.g., Equipment instead of Supplies), the trial balance will detect the error.

• Answer: False

• Rationale: The trial balance only checks if Total Debits = Total Credits. Since a debit was still posted as a debit, the math balances, hiding the classification error.

Q17. The first item entered into a ledger account during the posting process is the monetary amount.

• Answer: False

• Rationale: Chronologically, the date of the transaction from the journal is entered first in the ledger account to preserve chronological order.

Q18. A debit balance in the Income Summary ledger account before it is closed indicates that the business made a net profit.

• Answer: False

• Rationale: Expenses are debited to Income Summary and revenues are credited. A net debit balance means expenses exceeded revenues, indicating a net loss.

Q19. When owner’s drawings are posted, the Drawings account receives a credit entry.

• Answer: False

• Rationale: The Drawings account tracks reductions in equity. Equity decreases with debits, so the Drawings account is debited.

Q20. When the difference between trial balance columns is divisible by 9, it strongly suggests a transposition or slide error occurred during posting.

• Answer: True

• Rationale: It is a proven mathematical rule that errors involving flipped numbers (transposition) or shifted decimals (slides) produce a discrepancy that is perfectly divisible by 9.

Q21. Posting adjusting entries is performed after the financial statements are prepared.

• Answer: False

• Rationale: Adjusting entries must be journalized and posted before financial statements are prepared to ensure revenues and expenses match the correct period.

Q22. The ledger allows managers to easily view the history and current status of a specific financial item, like Cash, in one location.

• Answer: True

• Rationale: This is the primary benefit of the ledger; it centralizes all changes regarding an account, which would otherwise be scattered throughout a chronological journal.

Q23. A zero balance in a ledger account means that no entries were posted to it during the period.

• Answer: False

• Rationale: An account can have a zero balance if the total value of debits posted to it exactly equals the total value of credits posted to it.

Q24. Accounts Receivable is an example of a control account in the general ledger.

• Answer: True

• Rationale: Accounts Receivable summarizes the total outstanding balances owed by all customers, matching the sum of individual customer accounts in the subsidiary ledger.

Q25. Posting a debit entry of $500 to a ledger account with an existing credit balance of $200 results in a debit balance of $300.

• Answer: True

• Rationale: Debits and credits offset each other. $500 (debit) minus $200 (credit) leaves a net remaining balance of $300 on the debit side.

Q26. Contra-asset accounts like Accumulated Depreciation carry a normal debit balance in the ledger.

• Answer: False

• Rationale: Contra-asset accounts operate inversely to normal assets. Therefore, they carry a normal credit balance.

Q27. The ledger account title should match the name utilized in the General Journal entry exactly.

• Answer: True

• Rationale: Consistency is vital. Posting to an account name that slightly varies from the journal entry will break the chart of accounts and create auditing confusion.

Q28. Double-posting an entire journal entry (posting it twice) causes the trial balance to be out of balance.

• Answer: False

• Rationale: Since both equal debits and credits are duplicated, the trial balance will still balance perfectly, though the accounts will be overstated.

Q29. A T-account is a formal accounting document presented to external shareholders.

• Answer: False

• Rationale: A T-account is an informal, simplified tool used for instructional purposes, visual analysis, and solving complex accounting problems internally.

Q30. Revenues, Liabilities, and Stockholders’ Equity accounts are all increased via credit postings.

• Answer: True

• Rationale: These accounts have normal credit balances, meaning any credit entries posted to them will increase their overall total.

Q31. During manual posting, the ledger page or account number is copied back into the journal’s Post. Ref. column as the final step.

• Answer: True

• Rationale: This serves as a confirmation stamp indicating that the specific line item has officially reached its final destination in the ledger.

Q32. Unearned Revenue is a revenue account and therefore receives a normal credit balance during posting.

• Answer: False

• Rationale: Unearned Revenue is a liability account because it represents cash received before service performance. It does have a credit balance, but because it is a liability, not a revenue.

Q33. A ledger can be maintained as a physical bound book, loose-leaf pages, or a digital database.

• Answer: True

• Rationale: Historically, ledgers were physical books, but modern accounting frameworks accept any structured system that reliably tracks account details.

Q34. Correcting errors found in the ledger should ideally be done by erasing or deleting the incorrect entry.

• Answer: False

• Rationale: Erasing entries destroys the audit trail. Errors must be fixed by creating and posting a formal correcting journal entry.

Q35. The ledger is prepared immediately before transactions are analyzed.

• Answer: False

• Rationale: The ledger exists continuously, but data is posted to it after transactions are analyzed and journalized.

Q36. Posting a credit to an Expense account will decrease the balance of that expense.

• Answer: True

• Rationale: Expenses have a normal debit balance. Therefore, a credit posting serves to reduce the accumulated expense balance.

Q37. The Chart of Accounts is a listing of all ledger accounts available for recording transactions.

• Answer: True

• Rationale: The Chart of Accounts serves as an index or table of contents for the general ledger, assigning a unique identifier number to every account.

Q38. If the total credits in an account exceed the total debits, the ledger account has a debit balance.

• Answer: False

• Rationale: If credits outnumber debits, the account holds a credit balance.

Q39. Posting a transaction for utilities paid in cash requires a debit to Cash and a credit to Utilities Expense.

• Answer: False

• Rationale: It requires a debit to Utilities Expense (increasing the expense) and a credit to Cash (decreasing the asset).

Q40. The ending balances from the ledger accounts are used directly to construct the Trial Balance.

• Answer: True

• Rationale: The Trial Balance is simply a summary sheet that pulls the final net debit or credit balances from every ledger account to check their mathematical equality.

Q41. A subsidiary ledger for Accounts Payable contains the individual transaction history and balance for each supplier/vendor.

• Answer: True

• Rationale: It provides the breakdown of exactly how much money is owed to every individual vendor, rolling up into the General Ledger Accounts Payable control account.

Q42. In a running balance ledger format, if an asset account has a $1,000 debit balance and a $400 debit is posted, the new balance is $600.

• Answer: False

• Rationale: Since both are debits, they add together. $1,000 + $400 = $1,400 debit balance.

Q43. Closing entries are posted to the general ledger to clear out the balances of permanent accounts.

• Answer: False

• Rationale: Closing entries are used exclusively to clear out temporary accounts. Permanent accounts are never closed.

Q44. Cross-indexing bridges the journal and the ledger together, facilitating an efficient financial audit.

• Answer: True

• Rationale: Cross-indexing provides a clear trail, allowing auditors to move forward from a journal entry to the ledger or trace backward from the ledger to the source entry.

Q45. Posting an adjusting entry for depreciation involves debiting Accumulated Depreciation and crediting Depreciation Expense.

• Answer: False

• Rationale: The correct posting is a debit to Depreciation Expense (increasing an expense) and a credit to Accumulated Depreciation (increasing a contra-asset).

Q46. The ledger shows transactions grouped by date, whereas the journal shows transactions grouped by account.

• Answer: False

• Rationale: The reverse is true. The journal groups entries chronologically by date, while the ledger breaks them down and groups them by account.

Q47. If an error is made by posting a $90 debit as a $900 debit, this is categorized as a slide error.

• Answer: True

• Rationale: Shifting the digits by adding or removing zeros (moving the decimal point) is the definition of a slide error.

Q48. The process of posting is completely objective and requires no accounting estimates.

• Answer: True

• Rationale: Posting is a purely mechanical clerical process of transferring numbers from one book to another. Estimation occurs before journalizing during transaction analysis.

Q49. Retained Earnings is a permanent account whose ledger balance is updated at the end of the period via closing entries.

• Answer: True

• Rationale: Retained Earnings accumulates the net income or loss and dividends of the business, which are formally posted to it from temporary accounts during the closing phase.

Q50. The ultimate objective of posting to the ledger is to organize data so that accurate financial statements can eventually be prepared.

• Answer: True

• Rationale: Raw chronological data is hard to report on. Grouping data into ledger accounts provides the clear totals required to compile Income Statements and Balance Sheets.

 

Posting to Ledger Quiz (True/False)

Question 1: Posting to the ledger is the process of transferring journal entries to the individual accounts in the ledger. Answer: True Explanation: Posting is the second step in the accounting cycle. It involves transferring the debit and credit amounts from the journal (Book of Original Entry) to the respective accounts in the ledger (Book of Final Entry) for proper classification.

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Question 2: Transactions are first recorded in the ledger before being posted to the journal. Answer: False Explanation: Transactions are first recorded chronologically in the journal. Posting moves these entries from the journal to the ledger.

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Question 3: Only the debit side of a journal entry is posted to the ledger. Answer: False Explanation: Both debit and credit aspects of every journal entry must be posted to maintain the double-entry principle.

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Question 4: The folio (posting reference) is written in both the journal and the ledger. Answer: True Explanation: The folio column helps cross-reference entries between the journal and ledger, making it easier to trace transactions and avoid errors.

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Question 5: Posting is usually done daily for every single transaction in large businesses. Answer: False Explanation: Posting is typically done periodically (weekly or monthly) depending on the volume of transactions to improve efficiency.

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Question 6: If a transaction is not posted to the ledger, the trial balance will still tally. Answer: False Explanation: Omitting a posting means one side of the double entry is missing, causing the trial balance totals to disagree.

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Question 7: Compound journal entries are posted to multiple ledger accounts. Answer: True Explanation: A compound entry affecting more than two accounts is posted separately to each individual ledger account involved.

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Question 8: The ledger is also known as the Book of Original Entry. Answer: False Explanation: The journal is the Book of Original Entry, while the ledger is called the Book of Final Entry.

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Question 9: In subsidiary books like the Sales Journal, individual entries are posted to personal accounts and the total is posted to the Sales Account. Answer: True Explanation: This is standard practice in columnar subsidiary books to maintain control accounts and personal ledgers.

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Question 10: Contra entries in the Cash Book require posting to the ledger. Answer: False Explanation: Contra entries (e.g., cash deposited into bank) are recorded on both sides of the Cash Book and do not need further posting to the ledger.

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Question 11: Discount allowed is posted to the debit side of the Discount Allowed Account. Answer: True Explanation: The total of the discount allowed column in the Cash Book is posted to the debit of the Discount Allowed nominal account.

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Question 12: An error of omission in posting means posting an amount to the wrong side of an account. Answer: False Explanation: Posting to the wrong side is an error of commission. Complete non-posting of a transaction is an error of omission.

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Question 13: Posting on the wrong side of a ledger account causes the trial balance to differ by twice the amount. Answer: True Explanation: Reversing the side doubles the imbalance in the trial balance (one side overstated, the other understated by the same amount).

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Question 14: Adjusting entries are posted to the ledger at the beginning of the accounting period. Answer: False Explanation: Adjusting entries (accruals, prepayments, depreciation, etc.) are journalized and posted at the end of the period.

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Question 15: Closing entries are posted only to real and personal accounts. Answer: False Explanation: Closing entries are made to nominal (temporary) accounts to transfer their balances to the Profit and Loss Account.

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Question 16: In computerized accounting systems, posting to the ledger is done automatically. Answer: True Explanation: Modern accounting software posts transactions to the ledger in real time as soon as they are entered and validated.

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Question 17: The main purpose of the ledger is to provide classified information about each account. Answer: True Explanation: The ledger summarizes all transactions related to a particular account head, which is essential for preparing trial balance and financial statements.

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Question 18: Balancing of ledger accounts is done before posting. Answer: False Explanation: Balancing is performed after all postings for the period to determine the closing balance of each account.

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Question 19: A decrease in a liability account is posted on the credit side. Answer: False Explanation: A decrease in liability is posted on the debit side, while an increase is posted on the credit side.

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Question 20: The total of both sides of a ledger account is called casting. Answer: True Explanation: Casting refers to totaling the debit and credit columns before calculating the balance.

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Question 21: Personal accounts in the ledger always show a debit balance. Answer: False Explanation: Debtors usually have debit balances, while creditors have credit balances.

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Question 22: Opening balances at the start of a new year are posted through a journal entry. Answer: True Explanation: An opening journal entry is prepared based on the previous year’s balance sheet and then posted to the ledger.

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Question 23: Profit or loss for the period can be directly determined from individual ledger accounts. Answer: False Explanation: Profit or loss is calculated in the Profit and Loss Account using the balances of nominal accounts from the ledger.

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Question 24: Duplicate posting of the same journal entry is an error of omission. Answer: False Explanation: It is an error of commission (specifically duplication), and it will cause the trial balance to be out by double the amount.

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Question 25: The Cash Book serves as both a book of original entry and part of the ledger. Answer: True Explanation: The Cash Book replaces the Cash and Bank accounts in the ledger.

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Question 26: Posting of credit purchases involves debiting the Purchases Account and crediting the supplier’s account. Answer: True Explanation: This follows the golden rules of accounting for real and personal accounts.

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Question 27: “c/d” in a ledger account means carried forward to the next year. Answer: False Explanation: “c/d” stands for carried down (to the next period within the same ledger page or account).

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Question 28: Additional capital introduced by the owner is posted to the credit side of the Capital Account. Answer: True Explanation: Capital increases on the credit side as it represents an increase in owner’s equity.

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Question 29: Depreciation is posted by debiting the Asset Account. Answer: False Explanation: Depreciation is credited to the Asset Account (or Accumulated Depreciation) and debited to the Depreciation Expense Account.

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Question 30: An error of principle occurs when capital expenditure is debited to a revenue account. Answer: True Explanation: Such errors violate fundamental accounting principles (e.g., capital vs. revenue expenditure).

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Question 31: Prepaid expenses are posted by debiting the Prepaid Expense Account and crediting the Expense Account. Answer: True Explanation: This adjusting entry reduces the expense for the current period and creates a current asset.

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Question 32: Revenue accounts normally have debit balances. Answer: False Explanation: Revenue accounts have credit balances because they increase owner’s equity.

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Question 33: The trial balance is prepared immediately after journalizing and before posting. Answer: False Explanation: The trial balance is prepared after posting all journal entries to the ledger.

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Question 34: Posting reference is not necessary in computerized accounting. Answer: True Explanation: Software automatically maintains digital links and audit trails between entries.

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Question 35: Sales Returns are posted to the debit side of the Sales Returns Account. Answer: True Explanation: Sales Returns is a contra-revenue account and is debited when goods are returned by customers.

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Question 36: All ledger accounts must be balanced at the end of every day. Answer: False Explanation: Balancing is usually done at the end of the month or accounting period.

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Question 37: The ledger helps in detecting errors in the accounting records. Answer: True Explanation: Through trial balance and individual account review, many posting and arithmetical errors can be identified.

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Question 38: Posting from the Purchases Returns Journal credits the Purchases Returns Account. Answer: True Explanation: Purchases Returns reduce the net purchases and are credited to the Purchases Returns Account.

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Question 39: In the ledger, the balance of an expense account is usually a credit balance. Answer: False Explanation: Expense accounts have debit balances as they decrease owner’s equity.

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Question 40: Journalizing and posting are the same process. Answer: False Explanation: Journalizing is recording in the journal; posting is transferring those records to the ledger.

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Question 41: Outstanding expenses are posted by creating a liability account. Answer: True Explanation: The entry debits the expense and credits an outstanding liability account.

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Question 42: The folio column is only used in the journal, not in the ledger. Answer: False Explanation: It is used in both to enable cross-referencing.

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Question 43: Posting helps in preparing the financial statements. Answer: True Explanation: Ledger balances are the main source of information for the trial balance and final accounts.

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Question 44: If a transaction is posted to the wrong account but with the correct amount and side, it is an error of commission. Answer: True Explanation: This is a classic example of an error of commission that does not affect the trial balance agreement.

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Question 45: Real accounts are closed at the end of the accounting period. Answer: False Explanation: Real accounts (assets, liabilities) carry forward their balances; only nominal accounts are closed.

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Question 46: The three-column Cash Book’s discount columns require posting to the ledger. Answer: True Explanation: Totals of discount allowed and discount received columns are posted to their respective nominal accounts.

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Question 47: Posting is not required for opening entries. Answer: False Explanation: Opening entries must be posted to bring forward balances into the new ledger.

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Question 48: A compensating error occurs when two errors cancel each other out. Answer: True Explanation: Such errors do not affect the trial balance even though individual accounts may be wrong.

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Question 49: The primary objective of posting is to record transactions chronologically. Answer: False Explanation: Chronological recording is the purpose of the journal. Posting’s objective is classification by account.

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Question 50: After completing posting and adjustments, the next step is to prepare the trial balance. Answer: True Explanation: The trial balance verifies the arithmetical accuracy of all postings before preparing final financial statements.

Posting to Ledger Quiz: 50 True/False Questions with Detailed Explanations

Part 1: Basic Concepts and Definitions

Part 2: The Mechanics of Posting (Debits and Credits)

Part 3: Calculating and Understanding Account Balances

Part 4: Subsidiary Ledgers and Control Accounts

Part 5: Errors, Corrections, and Computerized Systems