PRC-1 · Chapter 3 · Question 1 of 100
Which of the following best describes the primary purpose of a 'Chart of Accounts' for a business entity?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) To provide a unique code and heading for each account to ensure consistent posting of transactions.
Explanation
A chart of accounts is a list of accounts created by a business featuring unique codes and headings. This structure ensures that all transactions are recognized consistently in accordance with the requirements of the business.
More Ledgers and Trial Balance MCQs
- Q3When 'Orion Manufacturing' purchases raw materials on credit, how is the periodic total of the Purchases Day Book posted to the ledgers?
- Q4Which of the following accounts is typically NOT maintained within the General Ledger if an entity uses subsidiary ledgers?
- Q5The total of the 'Discount Allowed' column in the three-column cash book of 'Horizon Enterprises' is posted to which account at the end of…
- Q6At the end of the financial year, which of the following groups of account balances will be carried forward to the next accounting period…
- Q7Which of the following accounts of 'Skyline Services' must be formally closed to the statement of comprehensive income at the year-end?