1. The primary ledger containing all the balance sheet and income statement acco
ID: 2552633 • Letter: 1
Question
1. The primary ledger containing all the balance sheet and income statement accounts is the a. general ledger b. creditors ledger c. customers ledger d. subsidiary ledger 2. The controlling account in the general ledger that summarizes the individual customer accounts in the subsidiary ledger is entitled a. Purchases b. Accounts Payable c. Fees Earned d. Accounts Receivable When there are a large number of individual accounts with a common characteristic, it is common to place them in a separate ledger called a(n) a. general ledger b. income statement ledger c. group ledger d. subsidiary ledger 3. 4. Each individual entry in the revenue journal is posted to a. the accounts receivable controlling account b. the accounts receivable subsidiary ledger c. the revenue controlling account d. the accounts receivable subsidiary ledger and the controlling account Connie's Specialties Inc. offers exclusive interior design services. The following revenue information was determined from Connie's records. 5. Consultation Services Design Services Current Year Prior Year $1,000,000 800,000 1,800,000 1,500,000 Using a horizontal analysis, which is correct? a. The consultation services showed an increase in revenue of 25%. b. The consultation services showed a decrease in revenue of 25%. C. The design services showed an increase in revenue of 25%. d. The design services showed a decrease in revenue of 25%. 6. Snelling Company does business in two regional segments: North and South. The following annual revenue information was determined from the accounting system's invoice data:
Explanation / Answer
1) The primary ledger containing all the balance sheet and income statement accounts is the General Ledger. A general ledger is a complete record of all the financial transactions of the company throughout its life. The general ledger holds all of the information needed to prepare financial statements and includes assets, liabilities, equity, revenues and expenses
Therefore the correct option is a) general ledger.
2) The accounts receivable subsidiary ledger is the controlling account in the general ledger that summarizes the debits and credits to the individual customer accounts in Account Receivable. It lists the individual customer accounts in alphabetical order.
Therefore the correct option is d) Accounts Receivable
3) A subsidiary ledger is a large number of indvidual accounts with a common characteristic grouped together in a seperate ledger. Therefore the correct option is d) Subsidiary ledger.
4) Each individual entry in the Revenue journal is posted to Accounts Receivable subsidiary ledger. Therefore the correct option is b) the accounts receivable subsidiary ledger.
5) Increase in % in consultation services = (New Revenue - Old Revenue)/Old revenue
= ($1,000,000 - $800,000)/800,000 = 0.25 or 25%
Hence the correct option is a) The consultation services showed an increase in revenue of 25%.
6) Percentage change in revenue for South region = (New Revenue - Old Revenue)/Old Revenue
= ($260,000 - $220,000)/$220,000 = $40,000/$220,000 = 0.182 or 18.2%
Therefore the correct answer is a)18.2%.
7) In a vertical analysis, the total sales revenue is assumed to be equal to 100% and all other accounts are shown as percentage of total sales revenue. The given example also shows segment sales as a percentage of total sales for both year (i.e current year and prior year). Therefore the given example is of vertical analysis.
The correct option is b) vertical analysis.
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