Bookkeeping Basics Questions and Answers Rated A+

Bookkeeping Basics Questions and Answers Rated A+ What is the role of a bookkeeper in a business? A bookkeeper maintains accurate financial records, processes transactions, and ensures that the company's accounts are up to date. What is a source document in bookkeeping? A source document is a physical or electronic record that provides evidence of a financial transaction, such as invoices, receipts, or bank statements. How does a trial balance help in bookkeeping? A trial balance helps in bookkeeping by providing a preliminary check to ensure that the total debits equal total credits, which helps identify errors in the accounting records. What is the difference between a cash basis and an accrual basis of accounting? The cash basis of accounting recognizes transactions only when cash changes hands, while the accrual basis recognizes transactions when they occur, regardless of cash flow. 2 What is a ledger account? A ledger account is a detailed record of all transactions related to a specific account, such as cash or accounts payable. What is meant by "closing the books"? Closing the books refers to the process of finalizing all financial records for an accounting period, including making adjusting entries and preparing financial statements. What is a balance sheet's purpose? A balance sheet provides a snapshot of a company’s financial position at a specific date, listing its assets, liabilities, and equity to show financial stability. What is the purpose of maintaining accurate financial records? Maintaining accurate financial records ensures reliable financial reporting, compliance with regulations, and effective management of business resources. What is the role of accounts receivable? Accounts receivable represents money that customers owe to the business for goods or services provided on credit. 3 What is an invoice? An invoice is a document sent to a customer requesting payment for goods or services provided, detailing the amount due and