A Bookkeeping Student Has Come to You for Tutoring on the Recording

question 12

Essay

A bookkeeping student has come to you for tutoring on the recording process. She is confused about the relationship between the chart of accounts and the ledger. Explain the purpose of the chart of accounts and the general ledger. In your explanation indicate the relationship between these two items as well.

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Definitions:

Investing Activity

Transactions involving the purchase or sale of long-term assets and other investments, not including cash equivalents, reported in the cash flow statement.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders’ equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Equity

refers to the amount of ownership interest in a company, represented by the difference between assets and liabilities.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and shareholders' equity at a particular point in time.