The General Leger/Journal

Question 1

Rules of Double entry x4

Answer 1

1. Every transaction will affect at least two items in the Accounting Equation
2. The Accounting equation must always balance
3. Every transaction must be recorded in at least two ledger accounts
4. Every transaction must be recorded on the debit side of at least one account and the credit side of at least one other account

Question 2

What is the purpose of the general journal/ledger

Answer 2

To prepare a Trial Balance, which can help with decision-making

Question 3

What is a T-form ledger

Answer 3

A ledger with a debit (left) and a credit (right) side

Question 4

How are drawings closed

Answer 4

• Credit to drawings debit to capital
• Not closed through P&L Summary account, as not part of profit calculation

Question 5

How to establish a double-entry system

Answer 5

Put all balances given in + CAPITAL

Question 6

Define a trial balance

Answer 6

A list of all the accounts in the General Ledger and their balances, to determine if total debits equal total credits