SAC 1 - BOOKLET 2

Question 1

The general ledger

Answer 1

A ledger account is an accounting record that shows all the transactions that effect a particular item. The collective name of the main group of ledger accounts is General Ledger. Each item has its own seperate ledger which will record all increases or decreases in that particular item. Each transaction changes at least two items in the accounting equation so at least two ledger accounts will need to be changed.

Question 2

Why is the general ledger needed

Answer 2

Rewriting the accounting equation after every transaction in reality is not practical, particularly with the volume of transactions occurring on a daily basis. To overcome this dilemma an accounting system has been developed that is capable of recording changes in the accounting equation without requiring that the accounting equation be rewritten every time by recording transactions in ledger accounts.

Question 3

Summary of double entry rules 5 accounts

Answer 3

TYPE OF ACCOUNT INCREASE DECREASE
Owners equity. Credit. Debit
Asset. Debit. Credit
Liabilities. Credit. Debit
Expenses. Debit. Credit
Revenue. Credit. Debit