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

What is the relationship between a controlling account and a subsidiary ledger?

The subsidiary ledger contains only summary information, while the controlling account contains detailed transactions.

The subsidiary ledger summarizes the balances of all controlling accounts.

The controlling account is used only for internal management purposes, while the subsidiary ledger is used for external reporting.

The controlling account balance equals the sum of the balances in its subsidiary ledger.

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Verified step by step guidance

Understand the concept of a controlling account: A controlling account is a general ledger account that summarizes the total balances of individual accounts in a subsidiary ledger.

Understand the concept of a subsidiary ledger: A subsidiary ledger contains detailed information about individual accounts that are grouped under a controlling account. For example, the Accounts Receivable controlling account may have a subsidiary ledger listing individual customer balances.

Recognize the relationship: The balance of the controlling account in the general ledger must equal the sum of the balances of all individual accounts in the subsidiary ledger. This ensures accuracy and consistency between the general ledger and subsidiary ledger.

Clarify the purpose: The controlling account provides a summary for financial reporting purposes, while the subsidiary ledger provides detailed information for internal management and tracking.

Apply the principle: When reconciling accounts, always ensure that the total of the subsidiary ledger matches the balance of the controlling account to maintain accurate financial records.