Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Why is it important to record a posting reference in the accounts payable ledger?

It increases the balance of accounts payable automatically.

It eliminates the need for reconciling subsidiary ledgers.

It allows for the calculation of interest on outstanding payables.

It provides a clear audit trail linking the ledger entry to the original journal entry.

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Verified step by step guidance

Understand the purpose of the accounts payable ledger: It is a subsidiary ledger that tracks individual creditor accounts and their balances, ensuring detailed records of transactions.

Recognize the importance of posting references: A posting reference links the ledger entry to the original journal entry, creating a clear audit trail for tracking and verifying transactions.

Consider the role of audit trails: Audit trails are essential for ensuring accuracy, accountability, and transparency in financial records, which is critical for both internal and external audits.

Evaluate the incorrect options: The accounts payable ledger does not automatically increase balances, eliminate reconciliation needs, or calculate interest on payables. These are not functions of posting references.

Conclude the correct answer: Recording a posting reference in the accounts payable ledger ensures a clear audit trail, which is vital for linking ledger entries to their corresponding journal entries and maintaining reliable financial records.