The Accounting Information System - Ledgers Flashcards
Where are the transactions in the journals posted to?
The ledgers.
What is the use of the ledgers?
The ledgers keep the business transactions grouped by accounts. Similar transactions are grouped and recorded in the same ledger account.
Explain what is meant by ‘posted to ledgers’.
Posted to ledgers is the act of recording transactions in the ledgers.
Define ‘ledger’.
The ledger is a collection of books of accounts where entries of transactions recorded in journals are posted to.
How many types of ledgers are there?
Two: General Ledger and Subsidiary Ledgers
What can one find in the General Ledger?
All the ledger accounts except for the individual trade receivable (i.e. debtors) and individual trade payable (i.e. creditors) ledger accounts.
List the related journals for the General Ledger.
All the journals: Purchases Journal Purchases Returns Journal Sales Journal Sales Returns Journal Cash Book General Journal
List the two subsidiary ledgers.
- Trade Receivables Ledger (also called Sales Ledger)
2. Trade Payables Ledger (also called Purchases Ledger)
What does the Trade Receivables Ledger consist of?
All the individual trade receivable ledger accounts.
Listed the related journals for the Trade Receivables Ledger.
Sales Journal
Sales Returns Journal
Cash Book
General Journal
What does the Trade Payables Ledger consist of?
All the individual trade payable ledger accounts.
List the related journals for the Trade Payables Ledger.
Purchases Journal
Purchases Returns Journal
Cash Book
General Journal
What is the Trade Receivables Ledger also called / known as?
Sales Ledger
What is the Trade Payables Ledger also called / known as?
Purchases Ledger
Where are the amounts owing by the customers and amounts owing to the suppliers recorded in?
Individual trade receivable and trade payable accounts respectively.
Why are these individual trade receivable and trade payable accounts not placed in the General Ledger?
- These individual ledger accounts will clutter up the General Ledger since the bulk of the entries are made in the trade receivables (debtors) and trade payables (creditors) accounts.
- To reduce the size of the General Ledger.
Where are the individual trade receivable and trade payable accounts taken out and placed in?
Subsidiary Ledgers, i.e. Trade Receivables Ledger / Sales Ledger and Trade Payables Ledgers / Purchases Ledger.
What are control accounts?
They refer to the total trade receivables ledger account and the total trade payables ledger account.
What do the two control accounts contain?
The total amount of the individual trade receivable and trade payable accounts.
Where are the total trade receivables ledger account and the total trade payables ledger account (which are also known as control accounts) found in?
The General Ledger.
Which chapters of the textbook give a detailed explanation of the ledgers?
Chapters 4, 5 and 6.
What chapter of the textbook explains further the function of control accounts?
Chapter 16.
