Multiple Choice
Which of the following accounts usually has a debit balance?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Why should a business frequently post from the purchases journal to the accounts payable ledger?
A
To record cash receipts from customers in the accounts payable ledger.
B
To avoid recording duplicate sales transactions in the general ledger.
C
To ensure that the accounts payable balances are kept up to date for accurate liability reporting.
D
To reconcile the petty cash fund with the bank statement.
Verified step by step guidance1
Understand the purpose of the purchases journal: It is used to record credit purchases of goods and services, which will later affect the accounts payable ledger.
Recognize the role of the accounts payable ledger: This ledger tracks the amounts owed to suppliers and ensures accurate liability reporting for the business.
Identify the importance of frequent posting: Regularly updating the accounts payable ledger ensures that the balances reflect the most current liabilities, helping the business maintain accurate financial records.
Connect the purchases journal to the accounts payable ledger: Each entry in the purchases journal must be posted to the corresponding supplier's account in the accounts payable ledger to keep the balances updated.
Understand the broader impact: Accurate accounts payable balances are essential for financial reporting, decision-making, and maintaining good relationships with suppliers by ensuring timely payments.
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