14 Lecture

1. Which of the following is NOT a part of the process of posting to ledgers? a) Transferring transactional data from journal to ledger b) Determining the account to be debited or credited c) Preparing a balance sheet d) Calculating the total of each ledger account

Answer: c) Preparing a balance sheet

2. Which of the following is a ledger account that records a business's sales transactions? a) Accounts payable b) Accounts receivable c) Cash d) Sales revenue

Answer: d) Sales revenue

3. What is the purpose of recording stock in a business? a) To keep track of inventory levels b) To determine the cost of goods sold c) To calculate profits d) All of the above

Answer: d) All of the above

4. Which of the following is a type of inventory system that records inventory movements in real-time? a) Perpetual inventory system b) Periodic inventory system c) Just-in-time inventory system d) Economic order quantity system

Answer: a) Perpetual inventory system

5. Which of the following is a common method of recording stock? a) FIFO (First-In, First-Out) b) LIFO (Last-In, First-Out) c) Weighted average cost d) All of the above

Answer: d) All of the above

6. Which of the following accounts is debited when a business purchases inventory on credit? a) Accounts payable b) Accounts receivable c) Cost of goods sold d) Sales revenue

Answer: a) Accounts payable

7. Which of the following accounts is credited when a business sells inventory for cash? a) Accounts payable b) Accounts receivable c) Cost of goods sold d) Sales revenue

Answer: d) Sales revenue

8. Which of the following is a reason why businesses need to accurately record their stock levels? a) To prevent theft b) To avoid stockouts c) To determine the value of the business d) All of the above

Answer: b) To avoid stockouts

9. Which of the following inventory systems involves physically counting inventory at the end of a specific period? a) Perpetual inventory system b) Periodic inventory system c) Just-in-time inventory system d) Economic order quantity system

Answer: b) Periodic inventory system

10. Which of the following is a method of valuing inventory that assumes the most recent inventory purchases are the first to be sold? a) FIFO (First-In, First-Out) b) LIFO (Last-In, First-Out) c) Weighted average cost d) Specific identification

Answer: b) LIFO (Last-In, First-Out)

1. What is the purpose of posting to ledgers in accounting? Answer: The purpose of posting to ledgers is to transfer transactional data from the journal to the appropriate ledger accounts, enabling a business to maintain accurate financial records.

2. What is the difference between accounts payable and accounts receivable? Answer: Accounts payable are amounts owed by a business to its vendors or suppliers, while accounts receivable are amounts owed to a business by its customers.

3. What is the purpose of the perpetual inventory system? Answer: The purpose of the perpetual inventory system is to maintain a real-time record of inventory movements, enabling a business to keep track of inventory levels and to determine the cost of goods sold.

4. How is the cost of goods sold calculated? Answer: The cost of goods sold is calculated by adding the beginning inventory to the purchases made during the period and subtracting the ending inventory.

5. What is the purpose of the periodic inventory system? Answer: The purpose of the periodic inventory system is to physically count inventory at the end of a specific period, enabling a business to determine the value of its inventory and to adjust its records accordingly.

6. How is the weighted average cost method used to value inventory? Answer: The weighted average cost method involves calculating the average cost of inventory by dividing the total cost of goods available for sale by the total units available for sale.

7. What is the difference between FIFO and LIFO inventory valuation methods? Answer: FIFO assumes that the first inventory items purchased are the first to be sold, while LIFO assumes that the last inventory items purchased are the first to be sold.

8. How is the cost of goods sold recorded in the ledger? Answer: The cost of goods sold is recorded as a debit to the cost of goods sold account and a credit to the inventory account.

9. What is the purpose of the inventory turnover ratio? Answer: The purpose of the inventory turnover ratio is to measure how many times a business sells and replaces its inventory during a specific period.

10. How is the value of ending inventory calculated using the LIFO method? Answer: The value of ending inventory is calculated by multiplying the number of units in ending inventory by the cost per unit of the most recent inventory purchases.

Posting to Ledgers and Recording of Stock are two critical processes in accounting that enable businesses to maintain accurate financial records. Posting to ledgers involves transferring transactional data from the journal to the appropriate ledger accounts. This process helps a business to keep track of its financial transactions and maintain an accurate record of its financial position. Ledger accounts are used to record specific financial transactions, such as sales revenue, accounts receivable, and accounts payable. These accounts enable businesses to monitor their cash flows and track their financial performance over time. Recording stock is another essential process in accounting that enables businesses to keep track of their inventory levels and determine the cost of goods sold. The perpetual inventory system is commonly used to record inventory movements in real-time. This system involves using technology such as barcodes and scanners to keep track of inventory as it moves in and out of the business. Another inventory system used in accounting is the periodic inventory system. This system involves physically counting inventory at the end of a specific period to determine the value of the inventory and adjust the records accordingly. The cost of goods sold is a critical metric in accounting that is used to determine the cost of the goods sold by a business during a specific period. The cost of goods sold is calculated by adding the beginning inventory to the purchases made during the period and subtracting the ending inventory. The valuation of inventory is another important aspect of accounting that businesses must consider. Different inventory valuation methods include FIFO (First-In, First-Out), LIFO (Last-In, First-Out), and Weighted Average Cost. Each method has its advantages and disadvantages, and the choice of the method used will depend on the specific needs of the business. In conclusion, posting to ledgers and recording stock are two critical processes in accounting that enable businesses to maintain accurate financial records. By using these processes, businesses can track their financial performance, monitor their cash flows, and make informed decisions based on accurate financial data.