Financial Accounting Q2 (A) Compare and contrast the role of journal entries and ledger accounts in the accounting process. How does the relationship between these two elements ensure accurate financial reporting? Support your answer with examples. (5 Marks)
Ans :
Introduction
Journal entries and ledger accounts are critical components of the accounting process, allowing for precise financial tracking and reporting. Journal entries capture financial transactions as they happen, recording both the debit and credit sides, whereas ledger accounts consolidate and categories these entries into individual accounts.
Concept & Application
Journal entries are essential in accounting as they chronologically document all of a company’s financial transactions. Journal entries are used to record all financial transactions. These entries specify the type of transaction, the accounts that are impacted, and whether the accounts are debited or credited.
Conclusion
The relationship between journal entries and ledger accounts is fundamental to the accounting process, ensuring that financial records are accurate, organized, and balanced.
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