Question 1

Using special journals can save time in posting because column totals are often posted rather than individual entries.

Accepted Answer

Special journals such as cash receipts journal, cash disbursements journal, and sales journal are designed to record specific types of transactions in one place. They summarize similar transactions and allow for easy posting to the general ledger. Column totals are often posted instead of individual entries, saving time and reducing the risk of errors.

Question 2

Control accounts are always located in the general ledger.

Accepted Answer

Control accounts, such as accounts receivable and accounts payable, are maintained in the general ledger to summarize the transactions of subsidiary ledgers or individual accounts.

Question 3

A company would not likely use subsidiary ledgers for

Accepted Answer

Subsidiary ledgers are used to maintain detailed information about individual accounts in a general ledger. Retained earnings, however, is not an individual account but rather a summary of the company's profits and losses over time. Therefore, a company would not likely use a subsidiary ledger for it.

Question 4

A subsidiary ledger is a group of control accounts which provides information to the managers for controlling the operation of the company.

Accepted Answer

A subsidiary ledger is a group of similar accounts whose combined balances equal the balance of a specific general ledger account, and it is used to provide detailed information about a general ledger account, not to control operations.

Question 5

The one characteristic that all entries recorded in a cash receipts journal have in common is

Accepted Answer

All entries recorded in a cash receipts journal represent collections from customers, regardless of the specific source of the collections (such as merchandise sales, loan payments, or other sources). Therefore, choice B is the best answer. Choices A and D are incorrect because they contradict each other, and because some entries in a cash receipts journal may represent credits to other accounts (such as Accounts Receivable or Sales Discounts). Choice C is incorrect because not all entries in a cash receipts journal originate from the sales of merchandise (for example, a company may receive cash from a customer for a service provided).

Question 6

The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted.

Accepted Answer

The reference column in a sales journal is used to indicate the general ledger account number when the entry is posted. This helps in tracking and organizing financial transactions in the accounting system.

Question 7

A subsidiary ledger frees the general ledger from details of

Accepted Answer

A subsidiary ledger contains details of individual balances for specific accounts, such as accounts receivable or accounts payable. By keeping this information in a separate ledger, the general ledger is freed from having to record and track all of these individual balances, making it easier to manage the overall financial picture of the company.

Question 8

The balance of a control account in the general ledger

Accepted Answer

The balance of a control account in the general ledger must equal the composite balance of individual accounts in a related subsidiary ledger. The purpose of a control account is to provide a summary of the transactions and balances in a subsidiary ledger, so it should reflect the total of the individual accounts in that ledger. A control account balance is not necessarily zero, and it is not required to equal the total assets of the company.

Question 9

Adjusting entries are recorded

Accepted Answer

Adjusting entries are recorded in the general journal to update accounts before financial statements are prepared. These entries are then posted to the general ledger accounts.

Question 10

A debit column for Sales Returns and Allowances may be found in the cash payments journal.

Accepted Answer

The debit column for Sales Returns and Allowances is typically found in the sales journal, not the cash payments journal.

Question 11

A cash receipts journal can be used to record all transactions involving cash coming into the business, regardless of the source.

Accepted Answer

A cash receipts journal is used to record all cash coming into the business, whether it's from sales, loans, investments, or any other source.

Question 12

Special journals are used to record unique transactions which do not occur very often.

Accepted Answer

Special journals are used to record unique transactions which do not occur very often, such as a sales return journal or a purchase return journal.

Question 13

The one characteristic that all entries recorded in a multiple-column purchases journal have in common is a

Accepted Answer

The multiple-column purchases journal is used to record credit purchases made by a business. All entries in this journal will include a debit to the Accounts Payable account because the business has incurred a liability for the purchase. Therefore, the correct choice is D, a credit to the Accounts Payable account.

Question 14

If a transaction cannot be recorded in a special journal

Accepted Answer

If a transaction cannot be recorded in a special journal, it is recorded in the general journal. The general journal is used for transactions that cannot be recorded in any of the special journals. Therefore, the company does not have to refuse to enter into the transaction, record directly in the accounts in the general ledger, or record as an adjustment on the work sheet.

Question 15

A cash payments journal should not be used to record transactions which require payment by check.

Accepted Answer

A cash payments journal is used to record all transactions that involve the payment of cash or checks; it is not limited to cash-only transactions.

Question 16

A sales journal is used to record

Accepted Answer

A sales journal is specifically used to record only credit sales of merchandise, not cash sales, sales of all assets, sales returns, allowances, or sales discounts.

Question 17

Correcting entries are journalized in

Accepted Answer

Correcting entries are journalized in the general journal because they are one-time adjustments that are not part of the normal transaction cycle. They are recorded separately in the general journal rather than being posted directly to the general ledger.

Question 18

If merchandise from a cash sale is returned by a customer for a refund, the sales return is recorded in the

Accepted Answer

Sales returns from cash sales where the customer receives a refund are recorded in the cash payments journal, as this journal tracks all cash outflows, including refunds to customers.

Question 19

A single-column purchases journal indicates that

Accepted Answer

A single-column purchases journal allows for the recording of all acquisitions on account, not just purchases of merchandise on account. This could include purchases of supplies or other assets.

Question 20

A subsidiary ledger provides up-to-date information on specific account balances.

Accepted Answer

A subsidiary ledger contains detailed information for specific accounts, and is used to keep track of transactions and balances. It provides up-to-date information for these specific accounts, which can be used to create the overall balance for the main ledger.

Quiz 15: Subsudiary Ledgers and Special Journals