Posting to Ledger Quiz – 50 Multiple Choice Questions with Answers and Detailed Explanations
📑 table of contents
- Question 1
- Question 2
- Question 3
- Question 4
- Question 5
- Question 6
- Question 7
- Question 8
- Question 9
- Question 10
- Question 11
- Question 12
- Question 13
- Question 14
- Question 15
- Question 16
- Question 17
- Question 18
- Question 19
- Question 20
- Question 21
- Question 22
- Question 23
- Question 24
- Question 25
- Questions 26–50
- Part 1: Basic Concepts and Definitions
- Part 2: Mechanics of Posting and Debit/Credit Rules
- Part 3: Calculating and Understanding Account Balances
- Part 4: General Ledger vs. Subsidiary Ledger
- Part 5: Errors in Posting
- Part 6: The Accounting Cycle and Advanced Concepts
Question 1
What is the primary purpose of posting to the ledger?
A. Preparing financial statements
B. Recording transactions in journals
C. Transferring journal entries to individual accounts
D. Calculating depreciation
Answer: C. Transferring journal entries to individual accounts
Explanation: Posting is the process of transferring information from the journal to the ledger. This allows each account to show its complete transaction history and current balance.
Question 2
Which accounting record receives information directly from the journal during posting?
A. Trial Balance
B. Ledger Account
C. Income Statement
D. Cash Flow Statement
Answer: B. Ledger Account
Explanation: Journal entries are posted to individual ledger accounts so that transactions affecting each account can be accumulated and summarized.
Question 3
A ledger is best described as:
A. A book of original entry
B. A collection of individual accounts
C. A financial statement
D. A tax record
Answer: B. A collection of individual accounts
Explanation: The ledger contains all accounts used by a business, such as Cash, Accounts Receivable, and Revenue.
Question 4
When posting a journal entry, a debit entry is posted to:
A. The credit side of the ledger account
B. The left side of the ledger account
C. Both sides of the ledger account
D. The balance column only
Answer: B. The left side of the ledger account
Explanation: Debits are always recorded on the left side of an account, while credits are recorded on the right side.
Question 5
When posting a credit journal entry, it is recorded on:
A. The left side of the account
B. The debit side only
C. The right side of the account
D. The trial balance
Answer: C. The right side of the account
Explanation: Credits are posted to the right side of the corresponding ledger account.
Question 6
What information is usually included when posting to a ledger?
A. Date and amount only
B. Account title only
C. Date, description, and amount
D. Financial ratios
Answer: C. Date, description, and amount
Explanation: Ledger postings generally include the transaction date, reference information, and debit or credit amount.
Question 7
Which record is known as the book of original entry?
A. Ledger
B. Trial Balance
C. Journal
D. Balance Sheet
Answer: C. Journal
Explanation: Transactions are first recorded in the journal before being posted to the ledger.
Question 8
Posting helps accountants:
A. Hide transactions
B. Organize transactions by account
C. Eliminate journal entries
D. Reduce revenues
Answer: B. Organize transactions by account
Explanation: The ledger groups transactions by account, making it easier to determine balances.
Question 9
The reference column in a ledger account is mainly used to:
A. Calculate taxes
B. Identify the source journal entry
C. Prepare budgets
D. Determine depreciation
Answer: B. Identify the source journal entry
Explanation: References create an audit trail linking ledger postings to journal entries.
Question 10
Posting is performed after:
A. Financial statements are prepared
B. Transactions are journalized
C. Audits are completed
D. Budgets are approved
Answer: B. Transactions are journalized
Explanation: The normal accounting sequence is analyze → journalize → post.
Question 11
Which account would receive a debit posting when cash is received from a customer?
A. Revenue
B. Accounts Payable
C. Cash
D. Capital
Answer: C. Cash
Explanation: Receiving cash increases the Cash account, which has a normal debit balance.
Question 12
Posting a transaction affects:
A. Only one account
B. At least two accounts
C. No accounts
D. Only income accounts
Answer: B. At least two accounts
Explanation: Every journal entry follows double-entry accounting and affects at least two accounts.
Question 13
What is the normal balance of an asset account?
A. Credit
B. Debit
C. Zero
D. Either debit or credit
Answer: B. Debit
Explanation: Asset accounts increase with debits and decrease with credits.
Question 14
Which account is commonly credited when goods are sold for cash?
A. Cash
B. Inventory
C. Sales Revenue
D. Accounts Receivable
Answer: C. Sales Revenue
Explanation: Revenue increases with credits under double-entry accounting.
Question 15
Posting ensures that:
A. Transactions are grouped by account
B. Financial statements are automatically created
C. Taxes are calculated
D. Inventory is counted
Answer: A. Transactions are grouped by account
Explanation: The ledger accumulates transactions for each specific account.
Question 16
A T-account is commonly used to represent:
A. Budget reports
B. Ledger accounts
C. Tax returns
D. Cash flow statements
Answer: B. Ledger accounts
Explanation: T-accounts visually display debits and credits within an account.
Question 17
A debit to Accounts Receivable would be posted to:
A. Right side
B. Credit side
C. Left side
D. Balance column only
Answer: C. Left side
Explanation: Debits are always recorded on the left side of ledger accounts.
Question 18
What happens if a journal entry is not posted?
A. The ledger balance will be incomplete
B. Financial statements improve
C. Revenue increases
D. Assets decrease automatically
Answer: A. The ledger balance will be incomplete
Explanation: Missing postings result in inaccurate account balances.
Question 19
Which accounting record summarizes account balances after posting?
A. Journal
B. Invoice
C. Trial Balance
D. Purchase Order
Answer: C. Trial Balance
Explanation: The trial balance is prepared using balances from ledger accounts.
Question 20
Posting helps prepare:
A. Trial Balance
B. Sales Invoice
C. Tax Registration
D. Payroll Contract
Answer: A. Trial Balance
Explanation: Account balances from the ledger are used to create the trial balance.
Question 21
Which account receives a credit posting when cash is paid to a supplier?
A. Cash
B. Accounts Receivable
C. Equipment
D. Expenses
Answer: A. Cash
Explanation: Paying cash reduces the Cash account, which is recorded with a credit.
Question 22
A posting reference provides:
A. Audit trail information
B. Inventory details
C. Tax calculations
D. Payroll data
Answer: A. Audit trail information
Explanation: References help trace transactions between journals and ledgers.
Question 23
The ledger balance is determined by:
A. Comparing debits and credits within the account
B. Reviewing only credits
C. Reviewing only debits
D. Ignoring adjustments
Answer: A. Comparing debits and credits within the account
Explanation: The balance equals total debits minus total credits (or vice versa).
Question 24
Which account is credited when a customer pays an outstanding receivable?
A. Revenue
B. Cash
C. Accounts Receivable
D. Expense
Answer: C. Accounts Receivable
Explanation: The receivable decreases, requiring a credit.
Question 25
Posting occurs in which accounting cycle step?
A. After journalizing
B. Before analyzing transactions
C. After closing entries only
D. After audits
Answer: A. After journalizing
Explanation: Journal entries must exist before they can be posted.
Questions 26–50
26. Which account usually has a debit balance?
A. Revenue
B. Capital
C. Cash
D. Accounts Payable
Answer: C
Explanation: Cash is an asset and normally carries a debit balance.
27. Posting transfers data from:
A. Ledger to Journal
B. Journal to Ledger
C. Trial Balance to Ledger
D. Financial Statements to Journal
Answer: B
Explanation: Posting moves transaction information from journals into ledger accounts.
28. The general ledger contains:
A. Only asset accounts
B. Only liability accounts
C. All business accounts
D. Only revenue accounts
Answer: C
Explanation: The general ledger includes assets, liabilities, equity, revenues, and expenses.
29. Which account increases with a credit?
A. Cash
B. Equipment
C. Revenue
D. Prepaid Insurance
Answer: C
Explanation: Revenue accounts increase on the credit side.
30. Posting supports:
A. Accurate account balances
B. Tax evasion
C. Budget overruns
D. Inventory theft
Answer: A
Explanation: Accurate posting ensures reliable balances.
31. Which account is debited when equipment is purchased for cash?
A. Cash
B. Equipment
C. Revenue
D. Accounts Payable
Answer: B
Explanation: Equipment increases and receives a debit.
32. The ledger is also called:
A. Book of final entry
B. Book of original entry
C. Collection of accounts
D. Financial statement
Answer: C
Explanation: The ledger is a collection of all accounts.
33. Which side records credits?
A. Left
B. Right
C. Center
D. Top
Answer: B
Explanation: Credits are always posted on the right side.
34. A posting error may cause:
A. Incorrect balances
B. Better records
C. Automatic corrections
D. Increased profits
Answer: A
Explanation: Posting mistakes affect account accuracy.
35. Posting is necessary before preparing:
A. Trial Balance
B. Purchase Order
C. Tax License
D. Payroll Check
Answer: A
Explanation: The trial balance depends on posted ledger balances.
36. Which account decreases with a credit?
A. Cash
B. Revenue
C. Capital
D. Sales
Answer: A
Explanation: Cash is an asset and decreases with credits.
37. Each journal entry should be:
A. Posted once
B. Ignored
C. Deleted
D. Posted twice
Answer: A
Explanation: Each entry should be posted correctly and only once.
38. Posting helps detect:
A. Account balances
B. Weather conditions
C. Marketing trends
D. Product demand
Answer: A
Explanation: The ledger shows balances for every account.
39. The ledger provides information needed for:
A. Trial Balance
B. Tax Rate Selection
C. Advertising
D. Manufacturing
Answer: A
Explanation: Trial balances are created from ledger balances.
40. What is the main objective of posting?
A. Organizing account information
B. Calculating taxes
C. Managing payroll
D. Issuing invoices
Answer: A
Explanation: Posting classifies transactions by account.
41. A credit posting to Accounts Payable:
A. Increases liabilities
B. Decreases liabilities
C. Increases assets
D. Decreases equity
Answer: A
42. Which account receives a debit when rent is paid?
A. Cash
B. Rent Expense
C. Revenue
D. Capital
Answer: B
43. Posting creates:
A. Account histories
B. Budgets
C. Forecasts
D. Tax returns
Answer: A
44. A ledger account shows:
A. All activity affecting an account
B. Only year-end balances
C. Only revenues
D. Only expenses
Answer: A
45. Which statement is true?
A. Posting occurs before journalizing
B. Posting transfers journal data to accounts
C. Posting prepares financial statements directly
D. Posting eliminates errors
Answer: B
46. A debit to Expense accounts:
A. Increases expenses
B. Decreases expenses
C. Increases revenue
D. Decreases liabilities
Answer: A
47. Which accounting principle supports posting?
A. Double-entry accounting
B. Going concern only
C. Conservatism only
D. Materiality only
Answer: A
48. The balance of an account is calculated after:
A. Posting transactions
B. Preparing statements
C. Closing the business
D. Auditing
Answer: A
49. Which document provides the information needed for posting?
A. Journal Entry
B. Invoice Only
C. Trial Balance
D. Bank Statement
Answer: A
50. Why is posting important?
A. It provides organized account records for reporting.
B. It replaces journals.
C. It eliminates accounting standards.
D. It prevents all accounting errors.
Answer: A
Explanation: Posting organizes transaction data by account, allowing accountants to prepare trial balances, financial statements, and perform account analysis accurately.
Posting to Ledger Quiz
Q1. What is the primary purpose of posting?
-
A) To record transactions initially in chronological order.
-
B) To transfer information from the journal to the ledger accounts.
-
C) To prepare the financial statements directly.
-
D) To ensure that total assets equal total liabilities.
-
Correct Answer: B
-
Rationale: Posting is the process of transferring debit and credit amounts from the journal (where transactions are recorded chronologically) to the individual ledger accounts. This helps accumulate the effects of transactions on specific accounts.
Q2. In the ledger, a debit balance is normally found in which of the following accounts?
-
A) Service Revenue
-
B) Accounts Payable
-
C) Cash
-
D) Common Stock
-
Correct Answer: C
-
Rationale: Cash is an asset account. Normal balances for assets, expenses, and dividends are debits, whereas liabilities, equity, and revenues normally have credit balances.
Q3. What does the “Post. Ref.” (Posting Reference) column in the general journal indicate once a transaction is posted?
-
A) The date the transaction was posted.
-
B) The amount of the transaction.
-
C) The ledger account number to which the amount was posted.
-
D) The page number of the journal.
-
Correct Answer: C
-
Rationale: Entering the ledger account number in the journal’s Post. Ref. column signals that the line item has been successfully posted and links the journal entry to the specific ledger account.
Q4. If a debit entry of $500 to Equipment is incorrectly posted as a credit to Equipment, what will be the effect on the Equipment account balance?
-
A) It will be overstated by $500.
-
B) It will be understated by $500.
-
C) It will be understated by $1,000.
-
D) It will have no effect on the account balance.
-
Correct Answer: C
-
Rationale: Posting a debit as a credit reduces the intended balance rather than increasing it. The difference between the intended debit (+$500) and the incorrect credit (-$500) results in a total understatement of $1,000.
Q5. Which sheet or book is often referred to as the “book of final entry”?
-
A) The Journal
-
B) The Ledger
-
C) The Trial Balance
-
D) The Income Statement
-
Correct Answer: B
-
Rationale: The journal is known as the “book of original entry” because transactions are recorded there first. The ledger is the “book of final entry” because it is the final destination for recording individual transaction details into specific accounts.
Q6. During the posting process, what information is transferred from the journal to the ledger?
-
A) The date, journal page number, and the amount.
-
B) Only the names of the accounts.
-
C) Only the dollar amounts.
-
D) The full transaction explanation only.
-
Correct Answer: A
-
Rationale: Proper posting involves transferring the date of the transaction, the journal page (for cross-referencing), and the exact debit or credit amount to the respective ledger account.
Q7. A ledger that contains all the asset, liability, stockholders’ equity, revenue, and expense accounts is called the:
-
A) Subsidiary ledger
-
B) General ledger
-
C) Accounts receivable ledger
-
D) Special ledger
-
Correct Answer: B
-
Rationale: The General Ledger is the master set of accounts where all financial transactions of a business are summarized by account type.
Q8. What is the first step in the posting process for a specific journal entry line?
-
A) Write the journal page number in the ledger.
-
B) Enter the transaction date in the ledger account.
-
C) Calculate the new balance of the ledger account.
-
D) Enter the amount in the ledger column.
-
Correct Answer: B
-
Rationale: Chronologically, when updating a ledger account, the date of the transaction is entered first in the account’s date column to maintain an accurate historical record.
Q9. If a transaction is properly recorded in the journal but completely omitted during posting, the trial balance will:
-
A) Be out of balance.
-
B) Still balance, but both total debits and credits will be understated.
-
C) Still balance, but both total debits and credits will be overstated.
-
D) Show a credit balance higher than the debit balance.
-
Correct Answer: B
-
Rationale: Because both the debit and the credit sides of the transaction were omitted during posting, the equality of debits and credits is maintained, meaning the trial balance will still balance, though both totals will be lower than they should be.
Q10. What does a “T-account” represent in a simplified accounting format?
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A) A journal entry layout.
-
B) A simplified ledger account.
-
C) A balance sheet summary.
-
D) A bank reconciliation form.
-
Correct Answer: B
-
Rationale: A T-account is a visual tool used by educators and accountants to represent a ledger account, showing the account title at the top, debits on the left, and credits on the right.
Q11. When posting a credit entry to a liability account that already has a credit balance, the balance of the account will:
-
A) Decrease
-
B) Increase
-
C) Remain unchanged
-
D) Become a debit balance
-
Correct Answer: B
-
Rationale: Liabilities have a normal credit balance. Therefore, posting another credit to a liability account increases its overall balance.
Q12. The column in the Ledger account format labeled “Balance” is used to show:
-
A) The total amount of debits only.
-
B) The total amount of credits only.
-
C) The running or continuous balance of the account after each posting.
-
D) The net income of the business.
-
Correct Answer: C
-
Rationale: Modern ledger accounts use a running balance format (three-column or four-column ledger) to show the updated balance immediately after every transaction is posted.
Q13. If a $150 utility bill is paid with cash, what is the correct posting verification in the Cash ledger account?
-
A) A debit entry of $150.
-
B) A credit entry of $150.
-
C) A credit entry of $150 in Utilities Expense.
-
D) No entry is needed in Cash.
-
Correct Answer: B
-
Rationale: Paying a bill decreases Cash (an asset). Assets are decreased by credits, so the Cash ledger account must receive a credit posting of $150.
Q14. Why is cross-indexing (filling the Post. Ref. columns) between the journal and ledger important?
-
A) It acts as a bookmark, showing where the accountant left off, and provides an audit trail.
-
B) It automatically calculates the account balances.
-
C) It replaces the need for a trial balance.
-
D) It proves that no errors were made during the period.
-
Correct Answer: A
-
Rationale: Cross-indexing provides a clear audit trail, allowing anyone to trace an amount from the ledger back to its original journal entry, or from the journal forward to the ledger.
Q15. Which of the following errors will cause the trial balance to be out of balance?
-
A) Failing to post an entire journal entry.
-
B) Posting a debit to Salaries Expense instead of Rent Expense.
-
C) Posting a $500 debit as a $50 debit, while posting the credit correctly as $500.
-
D) Recording a transaction twice in the journal and posting it twice.
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Correct Answer: C
-
Rationale: If the debit is posted as $50 and the credit as $500, unequal amounts are transferred to the ledger, causing total debits on the trial balance to differ from total credits.
Posting to Ledger Quiz (Continued)
Q15. Which of the following errors will cause the trial balance to be out of balance?
(Note: Included here briefly to maintain continuity from the previous set)
-
Correct Answer: C (Posting unequal amounts for debit and credit).
Q16. When posting to the ledger, the left side of any T-account is always called the:
-
A) Credit side
-
B) Debit side
-
C) Balance side
-
D) Asset side
-
Correct Answer: B
-
Rationale: In standard accounting terminology, “Debit” simply means the left side of an account, while “Credit” means the right side, regardless of whether the account balance is increasing or decreasing.
Q17. Which of the following accounts normally has a credit balance in the general ledger?
-
A) Accounts Receivable
-
B) Prepaid Insurance
-
C) Unearned Revenue
-
D) Dividends
-
Correct Answer: C
-
Rationale: Unearned Revenue is a liability account because it represents an obligation to perform services in the future. Liabilities carry a normal credit balance.
Q18. If a transaction is posted to the wrong account but on the correct side (e.g., posting a debit to Supplies instead of Equipment), the Trial Balance will:
-
A) Be out of balance.
-
B) Still balance.
-
C) Show total debits higher than total credits.
-
D) Show total credits higher than total debits.
-
Correct Answer: B
-
Rationale: Because the debit amount was still posted as a debit (even to the wrong account), the total sum of debits will still match the total sum of credits, meaning the trial balance will still balance.
Q19. What does the “J12” notation in a ledger’s Posting Reference column mean?
-
A) Journal entry number 12.
-
B) January 12th transaction date.
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C) General Journal, page 12.
-
D) Ledger account number 12.
-
Correct Answer: C
-
Rationale: The “J” stands for Journal, and “12” refers to the specific page number of the General Journal where the original transaction details are recorded.
Q20. When a business pays cash for an insurance policy, how is the Prepaid Insurance account affected during posting?
-
A) It is credited to reflect an increase.
-
B) It is debited to reflect an increase.
-
C) It is credited to reflect a decrease.
-
D) It is unaffected.
-
Correct Answer: B
-
Rationale: Prepaid Insurance is an asset account. To record an increase in an asset, the account must be debited.
Q21. The sequence of steps in the accounting cycle requires that posting to the ledger occurs:
-
A) Before transactions are analyzed.
-
B) Before transactions are journalized.
-
C) After journalizing but before preparing a trial balance.
-
D) After preparing the financial statements.
-
Correct Answer: C
-
Rationale: The proper accounting workflow is: 1) Analyze transactions, 2) Journalize, 3) Post to the ledger, and 4) Prepare a trial balance.
Q22. A subsidiary ledger is used to:
-
A) Replace the general ledger entirely.
-
B) Provide detailed individual balances for a control account, like Accounts Receivable.
-
C) Record adjusting entries only.
-
D) Record transactions before they enter the journal.
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Correct Answer: B
-
Rationale: Subsidiary ledgers hold detailed, individual customer or vendor data that supports and matches the single summarized balance found in the General Ledger control account.
Q23. When posting a debit of $800 to an account that currently has a $300 credit balance, the new balance will be:
-
A) $1,100 credit
-
B) $500 credit
-
C) $500 debit
-
D) $1,100 debit
-
Correct Answer: C
-
Rationale: Opposites subtract. $800 (debit) minus $300 (credit) equals $500. Since the debit amount was larger, the resulting balance is a debit balance.
Q24. In a standard four-column ledger account layout, what are the four columns?
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A) Date, Explanation, Debit, Credit
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B) Debit, Credit, Debit Balance, Credit Balance
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C) Date, Post Ref, Debit, Credit
-
D) Debit, Credit, Balance, Post Ref
-
Correct Answer: B
-
Rationale: A four-column ledger includes standard transaction columns (Debit and Credit) along with two dedicated columns to keep a running tally of the net balance (Debit Balance and Credit Balance).
Q25. If the total debits in a ledger account exceed the total credits, the account has a:
-
A) Credit balance
-
B) Negative balance
-
C) Zero balance
-
D) Debit balance
-
Correct Answer: D
-
Rationale: An account balance is determined by the side that has the larger total. If debits are greater than credits, it carries a debit balance.
Q26. Posting an adjusting entry for accrued salaries would involve:
-
A) Crediting Cash and debiting Salaries Expense.
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B) Debiting Salaries Expense and crediting Salaries Payable.
-
C) Crediting Salaries Expense and debiting Salaries Payable.
-
D) Debiting Cash and crediting Salaries Expense.
-
Correct Answer: B
-
Rationale: Accrued salaries mean expenses have been incurred but not yet paid. Thus, Salaries Expense is debited (increased) and Salaries Payable is credited (liability increased).
Q27. Why is posting automated in modern ERP and accounting software systems?
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A) Because human accountants do not understand ledgers.
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B) To eliminate manual data entry errors and update ledger accounts instantly upon journalizing.
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C) Because software eliminates the need for a general ledger.
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D) To prevent the need for making adjusting entries.
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Correct Answer: B
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Rationale: Modern software posts transactions automatically to the ledger the moment a journal entry is saved, eliminating manual transposing or math errors.
Q28. What happens to the Common Stock account ledger when investors invest cash into the business?
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A) It receives a debit posting because equity increased.
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B) It receives a credit posting because equity increased.
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C) It receives a credit posting because equity decreased.
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D) It is not affected; only cash is posted.
-
Correct Answer: B
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Rationale: Equity accounts like Common Stock increase on the credit side. Therefore, receiving cash investments requires a credit posting to Common Stock.
Q29. A “slide error” during posting occurs when:
-
A) A debit is posted as a credit.
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B) An entire entry is skipped.
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C) A decimal point is misplaced (e.g., writing $540.00 as $54.00).
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D) Numbers are inverted (e.g., writing $54 as $45).
-
Correct Answer: C
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Rationale: A slide error happens when a decimal point is shifted to the left or right, changing the magnitude of the number but keeping the digits in the same order.
Q30. A “transposition error” during manual ledger posting involves:
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A) Reversing the order of two digits (e.g., writing $83 as $38).
-
B) Forgetting to post the credit side of a transaction.
-
C) Posting to the wrong asset account.
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D) Accidentally deleting a ledger account.
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Correct Answer: A
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Rationale: Transposition errors occur when two adjacent digits are accidentally swapped or inverted during manual transcription.
Q31. If the difference between total debits and total credits on a trial balance is perfectly divisible by 9, the error is likely:
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A) An omission of an entire journal entry.
-
B) A slide or transposition error.
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C) A posting to the completely wrong account type.
-
D) A calculation error on the income statement.
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Correct Answer: B
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Rationale: A mathematical characteristic of both transposition and slide errors is that the resulting discrepancy between debits and credits is always evenly divisible by 9.
Q32. When posting a closing entry for Service Revenue, the account is:
-
A) Credited to clear out its balance.
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B) Debited to reduce its balance to zero.
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C) Debited to increase its balance.
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D) Completely deleted from the general ledger.
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Correct Answer: B
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Rationale: Service Revenue has a normal credit balance. To close it out (reduce it to zero) at the end of the fiscal period, it must be debited for its entire balance.
Q33. Which account type’s ledger is completely closed and reset to zero at the end of every fiscal year?
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A) Permanent accounts
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B) Temporary accounts
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C) Asset accounts
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D) Liability accounts
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Correct Answer: B
-
Rationale: Temporary accounts (revenues, expenses, and dividends) track balances for a single period and are closed out to zero. Permanent accounts (assets, liabilities, equity) carry their balances forward.
Q34. When posting an entry to record a cash withdrawal by the owner for personal use (in a sole proprietorship), which ledger account is debited?
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A) Cash
-
B) Owner’s Capital
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C) Owner’s Drawings / Withdrawals
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D) Salaries Expense
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Correct Answer: C
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Rationale: Personal drawings reduce equity and are tracked in a temporary account called Owner’s Drawings, which is increased via a debit posting.
Q35. The master ledger account that summarizes the detailed balances found within a subsidiary ledger is called a:
-
A) Subsidiary control link
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B) Control account
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C) Summary register
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D) Nominal ledger
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Correct Answer: B
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Rationale: A control account (like Accounts Receivable or Accounts Payable) maintains the grand total of all individual balances kept in its corresponding subsidiary ledger.
Q36. What is the normal balance of the Accumulated Depreciation ledger account?
-
A) Debit
-
B) Credit
-
C) Zero
-
D) It changes every month
-
Correct Answer: B
-
Rationale: Accumulated Depreciation is a contra-asset account. Because it operates opposite to a normal asset account, it carries a normal credit balance.
Q37. If a ledger account has a normal debit balance, what do credit entries posted to this account do?
-
A) Increase the balance.
-
B) Decrease the balance.
-
C) Have no mathematical effect.
-
D) Double the balance.
-
Correct Answer: B
-
Rationale: For accounts with normal debit balances (like assets and expenses), credits represent decreases to the account balance.
Q38. When posting a transaction for a purchase of office supplies on account, what are the ledger updates?
-
A) Debit Office Supplies, Credit Cash.
-
B) Debit Accounts Payable, Credit Office Supplies.
-
C) Debit Office Supplies, Credit Accounts Payable.
-
D) Credit Office Supplies, Debit Accounts Payable.
-
Correct Answer: C
-
Rationale: Buying on account increases both an asset (Office Supplies) and a liability (Accounts Payable). Assets increase with debits; liabilities increase with credits.
Q39. If an accountant forgets to write the ledger account number in the journal’s Post. Ref. column, what is the consequence?
-
A) The trial balance will not balance.
-
B) The journal entry becomes invalid.
-
C) It breaks the cross-reference audit trail, making it hard to see if the item was actually posted.
-
D) The ledger balance will automatically reverse.
-
Correct Answer: C
-
Rationale: The missing reference does not affect the actual math if the amount was posted, but it breaks the visual link, making manual auditing difficult.
Q40. Which of the following accounts is a permanent account whose ledger balance carries forward to the next year?
-
A) Rent Expense
-
B) Retained Earnings
-
C) Fees Earned
-
D) Dividends
-
Correct Answer: B
-
Rationale: Retained Earnings is a stockholders’ equity account (balance sheet account), making it a permanent account that is never closed out to zero.
Q41. When posting a credit entry of $1,200 to a ledger account with an existing credit balance of $4,000, the new balance is:
-
A) $2,800 credit
-
B) $5,200 credit
-
C) $2,800 debit
-
D) $5,200 debit
-
Correct Answer: B
-
Rationale: Since both the existing balance and the new entry are credits, they are added together ($4,000 + $1,200 = $5,200 credit).
Q42. In a manual system, the process of ledger posting is usually performed:
-
A) Weekly, daily, or at the end of an accounting period depending on transaction volume.
-
B) Only once every calendar year.
-
C) Instantly and simultaneously with the journal entry.
-
D) Before the transaction is approved.
-
Correct Answer: A
-
Rationale: In manual ledger systems, posting is done periodically (daily or weekly) to ensure ledger accounts stay relatively updated for decision-making.
Q43. Which ledger account is used to summarize the net income or loss during the closing process before moving it to equity?
-
A) Retained Earnings
-
B) Income Summary
-
C) Cash Flow Statement
-
D) Net Income Account
-
Correct Answer: B
-
Rationale: Income Summary is a temporary clearing account used solely during the closing process to gather revenue and expense balances before transferring the net balance to equity.
Q44. What does a zero balance in a ledger account imply?
-
A) The account has been deleted.
-
B) Total debits posted equal total credits posted to that account.
-
C) An error was definitely made.
-
D) The account belongs to an asset.
-
Correct Answer: B
-
Rationale: A zero balance occurs when the sum of all debit entries exactly matches the sum of all credit entries within that ledger account.
Q45. If an accountant records a transaction in the General Journal but copies the debit amount to the ledger twice, this is an error of:
-
A) Omission
-
B) Commission / Duplication
-
C) Principle
-
D) Transposition
-
Correct Answer: B
-
Rationale: Duplicating a posting means entering the exact same debit or credit row twice into the ledger account, distorting the true balance.
Q46. The ledger is fundamentally structured and organized by:
-
A) Transaction date
-
B) Account number/Account type
-
C) Chronological importance
-
D) Invoice number
-
Correct Answer: B
-
Rationale: Unlike the journal (organized by date), the ledger is organized systematically by account classification (Assets, Liabilities, Equity, Revenues, Expenses).
Q47. When a company collects cash from a customer who was previously billed on account, the posting to the Accounts Receivable ledger account will be a:
-
A) Debit
-
B) Credit
-
C) Entry to increase its balance
-
D) Closing entry
-
Correct Answer: B
-
Rationale: Collecting cash reduces the customer’s outstanding balance (Accounts Receivable). Since Accounts Receivable is an asset, it decreases with a credit posting.
Q48. Which of the following is true regarding the relationship between the General Journal and General Ledger?
-
A) The ledger provides chronological details, while the journal summarizes them.
-
B) The journal is a book of original entry; the ledger is a book of final entry.
-
C) They contain completely different financial totals.
-
D) Software has made both of them obsolete.
-
Correct Answer: B
-
Rationale: Transactions must be entered into the journal first (original entry) before being organized into individual accounts in the ledger (final entry).
Q49. When posting a credit entry to an expense account, the balance of that expense account will:
-
A) Increase
-
B) Decrease
-
C) Turn into a liability
-
D) Remain completely unchanged
-
Correct Answer: B
-
Rationale: Expenses have a normal debit balance. Posting a credit to an expense account reduces its balance (often done for corrections or adjustments).
Q50. Reviewing ledger accounts to ensure postings are accurate and that the account balance makes logical sense is part of:
-
A) Financial Statement printing
-
B) Account Reconciliation / Auditing
-
C) Initial analysis
-
D) Closing the ledger
-
Correct Answer: B
-
Rationale: Checking ledger entries against original source documents or journals to find discrepancies ensures data integrity, which is a key part of internal reconciliation and auditing.
Posting to Ledger Quiz
Question 1: What is the primary purpose of posting to the ledger? A) To record transactions for the first time B) To transfer journal entries to individual accounts in the ledger C) To prepare the trial balance D) To prepare financial statements
Correct Answer: B Explanation: Posting is the process of transferring the debit and credit amounts from the journal to the respective accounts in the ledger. This step follows journalizing and is essential for classifying transactions by account.
Question 2: In which book are transactions initially recorded before posting? A) Ledger B) Trial Balance C) Journal D) Balance Sheet
Correct Answer: C Explanation: The journal (Book of Original Entry) is where transactions are first recorded chronologically with narration. Posting moves these entries to the ledger for classification.
Question 3: Which of the following is posted from the journal to the ledger? A) Only debit amounts B) Only credit amounts C) Both debit and credit amounts D) Only narration
Correct Answer: C Explanation: Every journal entry has equal debits and credits. Both sides must be posted to their respective ledger accounts to maintain the double-entry system.
Question 4: The process of entering the page number of the ledger in the journal is called: A) Casting B) Posting reference C) Balancing D) Journalizing
Correct Answer: B Explanation: Posting reference (folio) is written in both the journal and ledger to cross-reference entries easily and prevent duplication or omission.
Question 5: When posting a credit entry to an account, on which side of the ledger account is it recorded? A) Debit side B) Credit side C) Either side D) Narration side
Correct Answer: B Explanation: Credit entries from the journal are posted on the credit (right) side of the respective ledger account.
Question 6: Posting is usually done: A) Daily B) Weekly or monthly C) At the end of the financial year D) Only when preparing financial statements
Correct Answer: B Explanation: In practice, posting is done periodically (weekly or monthly) depending on the volume of transactions to keep ledger accounts updated.
Question 7: What is the “folio” column used for in the ledger? A) To write the account name B) To write the journal page number C) To write the balance D) To write the narration
Correct Answer: B Explanation: The folio (J.F. or L.F.) column helps link the journal page to the ledger page for easy tracing.
Question 8: Which account is not affected by posting from a simple journal entry? A) Cash Account B) Capital Account C) Nominal Account D) All accounts are affected
Correct Answer: D Explanation: Every account mentioned in the journal entry receives a posting.
Question 9: If a transaction is not posted to the ledger, it will: A) Not affect the trial balance B) Cause the trial balance to disagree C) Only affect the profit D) Only affect the balance sheet
Correct Answer: B Explanation: Omitting a posting means one side (debit or credit) is missing in the ledger, causing the trial balance totals to differ.
Question 10: Compound journal entries: A) Cannot be posted B) Are posted to multiple accounts on one or both sides C) Are posted only to one account D) Do not require posting
Correct Answer: B Explanation: Compound entries involve more than two accounts and are posted individually to each affected ledger account.
Question 11–50 continue in the same format:
Question 11: The balancing of ledger accounts is done: A) Before posting B) After posting C) During journalizing D) Never
Correct Answer: B Explanation: After all postings for a period, ledger accounts are balanced to find the closing balance, which is then carried down or carried forward.
Question 12: An error of omission in posting means: A) Posting to the wrong account B) Completely forgetting to post a transaction C) Posting a wrong amount D) Posting on the wrong side
Correct Answer: B Explanation: Error of omission occurs when a journal entry is not posted at all to the ledger.
Question 13: Posting from the Purchases Journal is done to: A) Only the Purchases Account B) Individual creditors’ accounts and the Purchases Account C) Only cash account D) Sales Account
Correct Answer: B Explanation: In subsidiary books, totals are posted to the control account, while individual entries are posted to personal accounts.
Question 14: The ledger is also known as: A) Book of Original Entry B) Book of Final Entry C) Book of Prime Entry D) Day Book
Correct Answer: B Explanation: The ledger is called the Book of Final Entry because it contains the classified and summarized information from the journal.
Question 15: When posting an opening entry, it is transferred from: A) Previous year’s ledger B) Journal C) Trial balance D) Balance sheet
Correct Answer: B Explanation: Opening entries are passed in the journal and then posted to the ledger to open the books for the new period.
Question 16: Posting from the Sales Journal is done to: A) Only the Sales Account B) Individual debtors’ accounts and the Sales Account C) Only the Cash Account D) Purchases Account
Correct Answer: B Explanation: In the Sales Journal (subsidiary book), individual credit sales are posted to the personal accounts of debtors (debit side), and the periodic total is posted to the Sales Account (credit side) in the ledger.
Question 17: When posting from the Purchases Returns Journal, the total is credited to: A) Purchases Account B) Purchases Returns Account C) Creditors Account D) Sales Account
Correct Answer: B Explanation: The total of Purchases Returns is posted to the credit of the Purchases Returns Account (a contra account) while individual entries are posted to the debit of respective creditors’ accounts.
Question 18: In the Sales Returns Journal, individual returns are posted to the: A) Credit side of customers’ accounts B) Debit side of customers’ accounts C) Credit side of Sales Account D) Debit side of Sales Returns Account
Correct Answer: A Explanation: Sales returns reduce the debtor’s balance, so they are posted on the credit side of individual customers’ accounts.
Question 19: Contra entries in the Cash Book are posted to: A) The Ledger B) Only the Cash Book itself (no further posting) C) The Journal Proper D) Trial Balance directly
Correct Answer: B Explanation: Contra entries (cash deposited into bank or withdrawn from bank) are recorded on both sides of the Cash Book and do not require posting to the ledger.
Question 20: The Cash Book is considered a: A) Subsidiary book only B) Part of the ledger and a book of original entry C) Final account D) Journal Proper
Correct Answer: B Explanation: The Cash Book serves a dual role — as a book of original entry and as a ledger account for cash and bank.
Question 21: Which of the following is posted to the ledger from the Cash Book? A) All cash transactions B) Only credit transactions and totals of discount columns C) Only contra entries D) All entries including contra
Correct Answer: B Explanation: Cash and bank columns are not posted to the ledger because they already function as ledger accounts. Only totals of discount, and credit transactions (if any) are posted.
Question 22: Discount allowed to customers is posted from the Cash Book to: A) Debit side of Discount Allowed Account B) Credit side of Discount Received Account C) Sales Account D) No posting required
Correct Answer: A Explanation: The total of the discount allowed column in the Cash Book is posted to the debit of the Discount Allowed Account in the ledger.
Question 23: An error of commission in posting occurs when: A) A transaction is completely omitted B) An amount is posted to the wrong account C) Posting is done on the wrong side D) Figures are transposed
Correct Answer: B Explanation: Posting to the wrong account (e.g., posting to “Rent” instead of “Salary”) is an error of commission.
Question 24: If an amount is posted to the wrong side of a ledger account, it will: A) Have no effect on the trial balance B) Cause the trial balance to be out by double the amount C) Cause the trial balance to be out by the amount D) Only affect the profit and loss
Correct Answer: B Explanation: Posting on the wrong side reverses the effect, so the difference in the trial balance will be twice the amount.
Question 25: Posting of adjusting entries is done at: A) The beginning of the accounting period B) The end of the accounting period C) During journalizing of daily transactions D) Only when preparing the balance sheet
Correct Answer: B Explanation: Adjusting entries (outstanding expenses, accrued income, depreciation, etc.) are journalized and posted at the end of the period before preparing final accounts.
Question 26: Closing entries are posted to: A) Real accounts B) Nominal accounts (to transfer to Profit & Loss Account) C) Personal accounts D) All ledger accounts
Correct Answer: B Explanation: Closing entries transfer balances of all nominal accounts (revenues and expenses) to the Profit and Loss Account.
Question 27: In computerized accounting, posting to the ledger: A) Is done manually by the accountant B) Happens automatically when a transaction is recorded C) Is not required D) Only occurs at year-end
Correct Answer: B Explanation: Modern accounting software automatically posts journal entries to the ledger in real time.
Question 28: The main advantage of posting to the ledger is: A) It speeds up journalizing B) It helps in preparing the trial balance and final accounts easily C) It eliminates the need for a journal D) It reduces the number of accounts
Correct Answer: B Explanation: The ledger provides a complete, classified record of each account, making it easier to prepare trial balance and financial statements.
Question 29: Which of the following is posted on the debit side of a liability account? A) Increase in liability B) Decrease in liability C) Increase in asset D) Owner’s drawings
Correct Answer: B Explanation: A decrease in liability (e.g., payment to creditors) is posted on the debit side of the liability account.
Question 30: The process of totaling both sides of a ledger account is called: A) Posting B) Casting C) Balancing D) Journalizing
Correct Answer: B Explanation: Casting means totaling the debit and credit sides of an account before balancing.
Question 31: After balancing a ledger account, the balance is: A) Written only on the debit side B) Written on the side with the smaller total and carried down to the opposite side C) Ignored until the end of the year D) Posted back to the journal
Correct Answer: B Explanation: The difference is written on the side with the smaller total as “Balance c/d” and then brought down as “Balance b/d” on the other side.
Question 32: Personal accounts in the ledger generally have: A) Debit balance only B) Credit balance only C) Either debit or credit balance depending on the transactions D) Zero balance always
Correct Answer: C Explanation: Debtors usually show debit balances, while creditors show credit balances.
Question 33: Which account is posted when goods are purchased on credit? A) Only Purchases Account B) Purchases Account (Dr) and Creditor’s Account (Cr) C) Only Creditor’s Account D) Cash Account
Correct Answer: B Explanation: The journal entry is debited to Purchases and credited to the supplier’s personal account.
Question 34: If the same journal entry is posted twice to the ledger, this is called: A) Error of omission B) Error of duplication C) Error of commission D) Compensating error
Correct Answer: B Explanation: Duplicate posting is an error of commission that will cause the trial balance to disagree by double the amount.
Question 35: The ledger helps in determining: A) Only the cash position B) The financial position of each individual account C) Only total sales D) Only total purchases
Correct Answer: B Explanation: Each ledger account gives a complete picture of all transactions related to that particular item or person.
Question 36: Posting reference (folio) is written in: A) Only the journal B) Only the ledger C) Both the journal and the ledger D) Neither
Correct Answer: C Explanation: It is written in both books for cross-referencing.
Question 37: At the beginning of a new financial year, opening balances are posted from: A) The previous year’s balance sheet via journal B) Directly from cash book C) Trial balance of previous year D) No posting is needed
Correct Answer: A Explanation: An opening journal entry is prepared and posted to the ledger to bring forward the opening balances.
Question 38: Which of the following cannot be found directly from the ledger? A) Individual customer balance B) Total depreciation for the year C) Profit or loss for the period D) Bank balance
Correct Answer: C Explanation: Profit or loss is determined after preparing the Trading and Profit & Loss Account using ledger balances.
Question 39: In the Three-Column Cash Book, the bank column is treated as: A) A separate ledger account B) Part of the ledger (no further posting needed) C) A nominal account D) A real account only
Correct Answer: B Explanation: Similar to the cash column, the bank column in the three-column cash book acts as the bank account in the ledger.
Question 40: If a credit sale is wrongly posted as a cash sale in the ledger, it is an error of: A) Principle B) Commission C) Omission D) Original entry
Correct Answer: A Explanation: This violates the principle of distinguishing between cash and credit transactions, affecting personal accounts.
Question 41: The abbreviation “c/d” in a ledger account stands for: A) Carried down B) Carried forward C) Credit down D) Cast down
Correct Answer: A Explanation: “Balance c/d” means the balance is carried down to the next period.
Question 42: Which of the following is posted on the credit side of the Capital Account? A) Additional capital introduced B) Drawings by the owner C) Net loss D) All of the above
Correct Answer: A Explanation: Introduction of additional capital increases the credit balance of the Capital Account.
Question 43: Depreciation is posted to the: A) Debit side of the Asset Account B) Credit side of the Asset Account C) Debit side of Depreciation Account only D) Both A and C
Correct Answer: D Explanation: Depreciation is debited to Depreciation Expense and credited to the Asset Account (or Accumulated Depreciation).
Question 44: The main objective of the ledger is to: A) Record transactions chronologically B) Provide classified information about each account C) Prepare the trial balance only D) Calculate profit directly
Correct Answer: B Explanation: The ledger classifies all transactions under individual account heads.
Question 45: An outstanding expense is posted as: A) Debit to Expense Account, Credit to Outstanding Liability B) Debit to Outstanding Liability, Credit to Expense Account C) Only to the Expense Account D) No posting required
Correct Answer: A Explanation: This is an adjusting entry to recognize the liability and expense.
Question 46: Prepaid expense is posted by: A) Debiting Prepaid Expense and crediting the Expense Account B) Debiting the Expense Account only C) Crediting the Expense Account D) Debiting Cash Account
Correct Answer: A Explanation: Prepaid expense reduces the current period’s expense and creates an asset.
Question 47: In the ledger, the balance of a Revenue Account is usually: A) Debit balance B) Credit balance C) Either debit or credit D) Always zero
Correct Answer: B Explanation: Revenues increase owner’s equity and therefore have credit balances.
Question 48: If a purchase of furniture is debited to Purchases Account instead of Furniture Account, this is: A) Error of commission B) Error of principle C) Compensating error D) Error of omission
Correct Answer: B Explanation: It violates the principle of distinguishing between capital and revenue expenditure.
Question 49: The final step after posting all entries and adjustments is: A) Preparing the Trial Balance B) Journalizing C) Posting opening entries D) Recording in subsidiary books
Correct Answer: A Explanation: The trial balance is prepared to verify the arithmetical accuracy of postings.
Question 50: What is the correct sequence in the accounting process? A) Ledger → Journal → Trial Balance B) Journal → Posting to Ledger → Trial Balance C) Trial Balance → Journal → Ledger D) Ledger → Trial Balance → Journal
Correct Answer: B Explanation: Transactions are first recorded in the journal (journalizing), then posted to the ledger, and finally the trial balance is prepared.
Posting to Ledger Quiz: 50 Multiple Choice Questions
Question 1
What is the primary purpose of a general ledger in accounting?
A) To record transactions in chronological order
B) To classify and summarize transactions by account
C) To prepare the initial source documents
D) To calculate the net income directly
Answer: B) To classify and summarize transactions by account
Explanation: While the journal records transactions chronologically, the general ledger classifies and summarizes these transactions by specific accounts (e.g., Cash, Accounts Receivable). This makes it easier to determine the balance of each account at any given time.
Question 2
The process of transferring information from the journal to the ledger is known as:
A) Journalizing
B) Balancing
C) Posting
D) Summarizing
Answer: C) Posting
Explanation: Posting is the specific accounting term used for the process of transferring debit and credit amounts from the journal entries to the respective accounts in the general ledger.
Question 3
Which of the following represents the correct sequence in the accounting cycle?
A) Ledger -> Journal -> Trial Balance
B) Journal -> Ledger -> Trial Balance
C) Trial Balance -> Journal -> Ledger
D) Journal -> Trial Balance -> Ledger
Answer: B) Journal -> Ledger -> Trial Balance
Explanation: The accounting cycle begins with recording transactions in the journal (journalizing), followed by transferring them to the ledger (posting), and then extracting the balances to prepare a trial balance.
Question 4
In a T-account, the left side is always used to record:
A) Credits
B) Increases
C) Debits
D) Decreases
Answer: C) Debits
Explanation: By convention in double-entry accounting, the left side of any T-account is the debit side, and the right side is the credit side, regardless of the type of account.
Question 5
When posting a journal entry that debits Cash and credits Service Revenue, how is the Cash ledger account affected?
A) The balance decreases
B) An entry is made on the right side
C) An entry is made on the left side
D) No change occurs until the end of the month
Answer: C) An entry is made on the left side
Explanation: Since Cash is an asset account, a debit increases its balance. Debits are always recorded on the left side of the ledger account.
Question 6
What does the “Folio” or “Posting Reference” (PR) column in a ledger account indicate?
A) The date of the transaction
B) The page number of the journal from which the entry was posted
C) The balance of the account
D) The signature of the accountant
Answer: B) The page number of the journal from which the entry was posted
Explanation: The Posting Reference column in the ledger provides a cross-reference to the specific journal page where the original transaction was recorded, creating an audit trail.
Question 7
If a $500 debit to Equipment is mistakenly posted as a $50 debit, this is an example of:
A) Error of principle
B) Error of omission
C) Error of commission
D) Slide error
Answer: D) Slide error
Explanation: A slide error occurs when a decimal point is misplaced (e.g., writing $50.0 instead of $500). It is a type of transposition or mathematical error during posting.
Question 8
Which of the following accounts will normally have a credit balance in the general ledger?
A) Accounts Receivable
B) Prepaid Rent
C) Accounts Payable
D) Salary Expense
Answer: C) Accounts Payable
Explanation: Accounts Payable is a liability account. Liabilities, equity, and revenue accounts normally have credit balances, meaning they increase with credits.
Question 9
After posting all transactions for the month, the total of the debit balances in the ledger should equal:
A) Total assets
B) Total liabilities and equity
C) The total of the credit balances
D) Net income
Answer: C) The total of the credit balances
Explanation: According to the fundamental rule of double-entry accounting, total debits must always equal total credits. This is verified by preparing a trial balance.
Question 10
What happens if a transaction is journalized correctly but not posted to the ledger?
A) The trial balance will still balance
B) The trial balance will not balance
C) The ledger will show an inflated balance
D) It is an error of principle
Answer: A) The trial balance will still balance
Explanation: If an entire journal entry (both debit and credit) is omitted from posting, the trial balance will still balance because equal amounts of debits and credits were left out. This is an error of omission.
Question 11
A business purchases supplies on account. The correct posting to the ledger would include:
A) Debit Supplies, Credit Cash
B) Debit Accounts Payable, Credit Supplies
C) Debit Supplies, Credit Accounts Payable
D) Debit Cash, Credit Accounts Payable
Answer: C) Debit Supplies, Credit Accounts Payable
Explanation: Purchasing supplies increases the asset (Supplies) which is a debit, and increases the liability (Accounts Payable) which is a credit.
Question 12
Which ledger contains the accounts of individual customers?
A) General Ledger
B) Accounts Payable Subsidiary Ledger
C) Accounts Receivable Subsidiary Ledger
D) Cash Book
Answer: C) Accounts Receivable Subsidiary Ledger
Explanation: The Accounts Receivable subsidiary ledger keeps track of individual customer balances. The total of this ledger must match the Accounts Receivable control account in the general ledger.
Question 13
The process of finding the difference between the total debits and total credits of an account is called:
A) Posting
B) Journalizing
C) Balancing
D) Auditing
Answer: C) Balancing
Explanation: Balancing an account involves adding up both sides (debit and credit) and finding the difference to determine the ending balance of that specific ledger account.
Question 14
If the debit side of a ledger account is greater than the credit side, the account has a:
A) Credit balance
B) Debit balance
C) Zero balance
D) Negative balance
Answer: B) Debit balance
Explanation: The balance of an account is determined by the side with the larger total. If debits exceed credits, the account has a debit balance.
Question 15
Posting a $1,000 credit to Accounts Receivable as a $1,000 debit will cause the trial balance to be out of balance by:
A) $0
B) $1,000
C) $2,000
D) $500
Answer: C) $2,000
Explanation: Posting a credit as a debit doubles the error. The debit side will be $1,000 too high, and the credit side will be $1,000 too low, creating a $2,000 difference between total debits and total credits.
Question 16
Which of the following is NOT a column typically found in a standard general ledger format?
A) Date
B) Explanation/Particulars
C) Customer Address
D) Balance
Answer: C) Customer Address
Explanation: A standard general ledger includes Date, Explanation, Posting Reference, Debit, Credit, and Balance columns. Customer addresses are kept in the subsidiary ledger or customer master file, not the general ledger.
Question 17
When an owner withdraws cash for personal use, the posting involves:
A) Debiting Cash and Crediting Drawings
B) Debiting Drawings and Crediting Cash
C) Debiting Expense and Crediting Cash
D) Debiting Capital and Crediting Drawings
Answer: B) Debiting Drawings and Crediting Cash
Explanation: Drawings (or Withdrawals) is a contra-equity account that increases with a debit. Cash, an asset, decreases with a credit.
Question 18
An error where a transaction is posted to the correct side but the wrong account of the same class is called:
A) Error of omission
B) Error of commission
C) Error of principle
D) Compensating error
Answer: B) Error of commission
Explanation: An error of commission occurs when an entry is made to the correct side (debit or credit) but to the wrong account, such as posting a payment from Customer A to Customer B’s account.
Question 19
The “Balance” column in a three-column ledger format is updated:
A) Only at the end of the year
B) Only at the end of the month
C) After every transaction is posted
D) Before preparing the financial statements
Answer: C) After every transaction is posted
Explanation: The advantage of the three-column (or running balance) ledger format is that it provides a continuous, up-to-date balance after every single posting.
Question 20
Posting a debit to Rent Expense and a credit to Cash means the business has:
A) Received rent from a tenant
B) Paid rent in cash
C) Accrued rent for the month
D) Prepaid rent for the next year
Answer: B) Paid rent in cash
Explanation: Debiting Rent Expense increases the expense, and crediting Cash decreases the asset, indicating that the business has paid its rent in cash.
Question 21
Which of the following errors will cause the trial balance totals to be unequal?
A) Failing to post an entire journal entry
B) Posting a debit as a credit
C) Posting to the wrong account but on the correct side
D) Recording a transaction twice
Answer: B) Posting a debit as a credit
Explanation: If a debit is posted as a credit, the total credits will exceed the total debits, causing the trial balance to be unequal. The other options affect both sides equally or not at all.
Question 22
The general ledger is often referred to as the book of:
A) Original entry
B) Final entry
C) Prime entry
D) Source documents
Answer: B) Final entry
Explanation: The journal is the book of original entry. The ledger is considered the book of final entry because it is the final destination for transactions before financial statements are prepared.
Question 23
If a company receives cash from a customer on account, the posting to the ledger will:
A) Increase Cash and increase Accounts Receivable
B) Decrease Cash and decrease Accounts Receivable
C) Increase Cash and decrease Accounts Receivable
D) Decrease Cash and increase Accounts Receivable
Answer: C) Increase Cash and decrease Accounts Receivable
Explanation: Receiving cash increases the Cash account (debit). Since the customer is paying off their debt, the Accounts Receivable account decreases (credit).
Question 24
What is a “Control Account” in the general ledger?
A) An account used only by management
B) A summary account whose balance equals the total of a subsidiary ledger
C) An account used to track bank fees
D) An account that controls the company’s budget
Answer: B) A summary account whose balance equals the total of a subsidiary ledger
Explanation: A control account (like Accounts Receivable or Accounts Payable) summarizes the total balances of all individual accounts kept in a separate subsidiary ledger.
Question 25
When closing entries are posted at the end of the accounting period, which accounts are reduced to a zero balance?
A) Asset accounts
B) Liability accounts
C) Temporary accounts (Revenues, Expenses, Drawings)
D) Permanent accounts
Answer: C) Temporary accounts (Revenues, Expenses, Drawings)
Explanation: Closing entries are posted to transfer the balances of temporary accounts (revenues, expenses, and dividends/drawings) to retained earnings or capital, resetting them to zero for the next period.
Question 26
Which of the following is an example of an error of original entry?
A) Posting a transaction to the wrong side of an account
B) Omitting a transaction entirely from the books
C) Recording a transaction with the wrong amount in both the journal and ledger
D) Posting a transaction to the wrong type of account
Answer: C) Recording a transaction with the wrong amount in both the journal and ledger
Explanation: An error of original entry occurs when the initial journal entry itself is incorrect, for example, recording a sale of $1,000 as $100 in both the journal and subsequently in the ledger. This error would not cause the trial balance to be out of balance.
Question 27
The primary source document for posting cash receipts to the ledger is usually the:
A) Sales invoice
B) Purchase order
C) Cash register tape or remittance advice
D) Bank statement
Answer: C) Cash register tape or remittance advice
Explanation: Cash register tapes provide a record of cash sales, while remittance advices accompany customer payments, both serving as primary source documents for cash receipts.
Question 28
If a company performs services on account, the journal entry would involve a debit to Accounts Receivable and a credit to Service Revenue. How does this affect the ledger?
A) Both Accounts Receivable and Service Revenue balances decrease.
B) Accounts Receivable balance decreases, Service Revenue balance increases.
C) Both Accounts Receivable and Service Revenue balances increase.
D) Accounts Receivable balance increases, Service Revenue balance decreases.
Answer: C) Both Accounts Receivable and Service Revenue balances increase.
Explanation: Performing services on account means the company has earned revenue (increasing Service Revenue with a credit) and is owed money (increasing Accounts Receivable with a debit).
Question 29
A transposition error occurs when:
A) A transaction is completely omitted from the books.
B) A debit is posted as a credit, or vice versa.
C) Digits are reversed in an amount (e.g., $54 posted as $45).
D) An entry is posted to the wrong class of account.
Answer: C) Digits are reversed in an amount (e.g., $54 posted as $45).
Explanation: A transposition error is a specific type of clerical error where the order of digits in an amount is accidentally reversed during recording or posting.
Question 30
Which of the following accounts is NOT a temporary account?
A) Rent Expense
B) Sales Revenue
C) Dividends
D) Retained Earnings
Answer: D) Retained Earnings
Explanation: Retained Earnings is a permanent (real) account, meaning its balance carries over from one accounting period to the next. Revenues, Expenses, and Dividends are temporary (nominal) accounts that are closed at the end of the period.
Question 31
When a business pays a utility bill, the posting to the ledger will involve:
A) Debit Utilities Expense, Credit Accounts Payable
B) Debit Cash, Credit Utilities Expense
C) Debit Utilities Expense, Credit Cash
D) Debit Accounts Payable, Credit Cash
Answer: C) Debit Utilities Expense, Credit Cash
Explanation: Paying a utility bill increases an expense (Utilities Expense is debited) and decreases cash (Cash is credited).
Question 32
The purpose of a post-closing trial balance is to:
A) Test the equality of debits and credits after closing entries.
B) List all accounts and their balances before closing entries.
C) Prepare the income statement.
D) Summarize all revenue and expense accounts.
Answer: A) Test the equality of debits and credits after closing entries.
Explanation: The post-closing trial balance ensures that only permanent accounts (assets, liabilities, and equity) have balances and that total debits still equal total credits after the closing process.
Question 33
If a company receives a payment from a customer for services to be performed in the future, the journal entry would involve a debit to Cash and a credit to Unearned Revenue. How does this affect the ledger?
A) Cash increases, Unearned Revenue decreases.
B) Cash decreases, Unearned Revenue increases.
C) Both Cash and Unearned Revenue increase.
D) Both Cash and Unearned Revenue decrease.
Answer: C) Both Cash and Unearned Revenue increase.
Explanation: Receiving cash increases the asset Cash (debit). Since the services haven’t been performed yet, it creates a liability (Unearned Revenue is credited).
Question 34
An error where a transaction is completely omitted from the books is called an:
A) Error of commission
B) Error of principle
C) Error of omission
D) Compensating error
Answer: C) Error of omission
Explanation: An error of omission occurs when a transaction is entirely left out of the accounting records. If both the debit and credit parts are omitted, the trial balance will still balance.
Question 35
Which of the following statements about the general ledger is true?
A) It provides a day-to-day record of all transactions.
B) It contains only asset and liability accounts.
C) It summarizes the financial activity for each account.
D) It is prepared before the journal.
Answer: C) It summarizes the financial activity for each account.
Explanation: The general ledger’s main function is to provide a summary of all financial activity for each individual account, showing its balance at any point in time.
Question 36
When a business makes a cash sale, the posting to the ledger will involve:
A) Debit Sales Revenue, Credit Cash
B) Debit Cash, Credit Sales Revenue
C) Debit Accounts Receivable, Credit Sales Revenue
D) Debit Cash, Credit Accounts Receivable
Answer: B) Debit Cash, Credit Sales Revenue
Explanation: A cash sale increases cash (Cash is debited) and increases revenue (Sales Revenue is credited).
Question 37
A trial balance will NOT detect which of the following errors?
A) Posting a debit as a credit
B) A transposition error
C) An error of omission (entire transaction)
D) Posting a transaction to the wrong account but on the correct side
Answer: C) An error of omission (entire transaction)
Explanation: If an entire transaction (both debit and credit) is omitted, the total debits and total credits will still be equal, and thus the trial balance will balance, failing to detect this error.
Question 38
The process of determining the final balance of a ledger account after all postings is called:
A) Journalizing
B) Footing
C) Balancing
D) Summarizing
Answer: C) Balancing
Explanation: Balancing an account involves calculating the difference between the total debits and total credits to arrive at the ending balance.
Question 39
If a company pays an expense that was previously accrued, the posting to the ledger will involve:
A) Debit Expense, Credit Cash
B) Debit Cash, Credit Accounts Payable
C) Debit Accounts Payable, Credit Cash
D) Debit Accrued Expense, Credit Cash
Answer: C) Debit Accounts Payable, Credit Cash
Explanation: When an accrued expense is paid, the liability (Accounts Payable or Accrued Expenses Payable) decreases (debited), and Cash decreases (credited).
Question 40
Which ledger provides detailed information for each individual creditor?
A) General Ledger
B) Accounts Receivable Subsidiary Ledger
C) Accounts Payable Subsidiary Ledger
D) Cash Ledger
Answer: C) Accounts Payable Subsidiary Ledger
Explanation: The Accounts Payable subsidiary ledger maintains individual records for each creditor, detailing amounts owed to them. Its total must reconcile with the Accounts Payable control account in the general ledger.
Question 41
An error where a revenue item is treated as a liability, or vice versa, is an example of:
A) Error of omission
B) Error of commission
C) Error of principle
D) Transposition error
Answer: C) Error of principle
Explanation: An error of principle occurs when a transaction is recorded in violation of accounting principles, such as classifying a revenue item as a liability or an asset as an expense.
Question 42
When a business purchases equipment with cash, the posting to the ledger will involve:
A) Debit Equipment, Credit Accounts Payable
B) Debit Cash, Credit Equipment
C) Debit Equipment, Credit Cash
D) Debit Expense, Credit Cash
Answer: C) Debit Equipment, Credit Cash
Explanation: Purchasing equipment increases the asset Equipment (debited) and decreases the asset Cash (credited).
Question 43
The general ledger serves as the basis for preparing the:
A) Source documents
B) Journal entries
C) Trial balance
D) Bank reconciliation
Answer: C) Trial balance
Explanation: The balances from all the accounts in the general ledger are used to prepare the trial balance, which is a list of all accounts and their balances at a specific point in time.
Question 44
If a debit entry of $200 is correctly posted to the ledger, but a corresponding credit entry of $200 is completely omitted, the trial balance will be out of balance by:
A) $0
B) $200
C) $400
D) $100
Answer: B) $200
Explanation: If a credit entry is omitted, the total debits will exceed the total credits by $200, causing the trial balance to be out of balance by that amount.
Question 45
Which of the following is a characteristic of a permanent account?
A) Its balance is closed at the end of the accounting period.
B) It appears on the income statement.
C) Its balance is carried forward to the next accounting period.
D) It represents revenues or expenses.
Answer: C) Its balance is carried forward to the next accounting period.
Explanation: Permanent (real) accounts, such as assets, liabilities, and equity (excluding drawings/dividends), retain their balances from one period to the next.
Question 46
When a company issues a check to pay for an advertisement, the posting to the ledger will involve:
A) Debit Cash, Credit Advertising Expense
B) Debit Advertising Expense, Credit Accounts Payable
C) Debit Advertising Expense, Credit Cash
D) Debit Accounts Payable, Credit Advertising Expense
Answer: C) Debit Advertising Expense, Credit Cash
Explanation: Paying for an advertisement increases an expense (Advertising Expense is debited) and decreases cash (Cash is credited).
Question 47
The process of summarizing the effects of transactions on each account is the main function of the:
A) Journal
B) Ledger
C) Trial Balance
D) Financial Statements
Answer: B) Ledger
Explanation: While the journal records transactions, the ledger’s primary role is to summarize and classify these transactions by account, showing the cumulative effect on each account’s balance.
Question 48
If a $100 credit to Sales Revenue is mistakenly posted as a $100 debit to Sales Revenue, the trial balance will be out of balance by:
A) $0
B) $100
C) $200
D) $50
Answer: C) $200
Explanation: Posting a credit as a debit for the same amount effectively creates a $200 imbalance. The credit side will be $100 too low, and the debit side will be $100 too high, resulting in a $200 difference.
Question 49
Which of the following is an advantage of using a general ledger?
A) It provides a detailed chronological record of transactions.
B) It helps in preparing financial statements by providing account balances.
C) It eliminates the need for journal entries.
D) It only tracks cash transactions.
Answer: B) It helps in preparing financial statements by providing account balances.
Explanation: The general ledger provides the up-to-date balances for all accounts, which are essential for preparing the trial balance and subsequently the financial statements.
Question 50
What is the final step in the posting process for a single transaction?
A) Recording the transaction in the journal.
B) Calculating the new balance of the ledger account.
C) Entering the journal page number in the ledger’s posting reference column.
D) Entering the ledger account number in the journal’s posting reference column.
Answer: C) Entering the journal page number in the ledger’s posting reference column.
Explanation: After the debit and credit amounts are posted to the respective ledger accounts, the final step is to enter the journal page number in the ledger’s posting reference column to create a cross-reference, completing the audit trail for that specific posting.
Posting to Ledger Quiz: 50 Multiple Choice Questions with Detailed Explanations
Part 1: Basic Concepts and Definitions
Part 2: Mechanics of Posting and Debit/Credit Rules
Part 3: Calculating and Understanding Account Balances
Part 4: General Ledger vs. Subsidiary Ledger
Part 5: Errors in Posting
Part 6: The Accounting Cycle and Advanced Concepts