Multiple Choice
Which of the following best describes 'money in savings which can pay expenses when income may not be accumulating' in the context of a trial balance?
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2. Transaction Analysis
Trial Balance
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A summary of total amounts owed, including outstanding charges and payments received, is called a(n):
A
Accounts Receivable Ledger
B
Statement of Account
C
General Journal
D
Trial Balance
Verified step by step guidance1
Understand the key terms in the problem: 'total amounts owed,' 'outstanding charges,' and 'payments received.' These terms refer to a summary of financial transactions between a business and its customers.
Recognize that the problem is asking for the name of the document or record that summarizes these transactions. This document is typically used to provide a clear overview of what is owed and what has been paid.
Analyze the options provided: 'Accounts Receivable Ledger,' 'Statement of Account,' 'General Journal,' and 'Trial Balance.' Each term represents a different type of financial record or tool.
Clarify the purpose of each option:
- 'Accounts Receivable Ledger' tracks individual customer accounts and their balances.
- 'Statement of Account' summarizes all transactions for a specific customer, including charges and payments.
- 'General Journal' records all financial transactions in chronological order.
- 'Trial Balance' lists all account balances to ensure debits equal credits.
Determine that the correct answer is 'Statement of Account,' as it specifically provides a summary of amounts owed, outstanding charges, and payments received for a customer.
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