ITPEC FE Morning October 2018 Question 80

Journal Book → General Ledger → Trial Balance Sheet → Work Sheet → Financial Statements — each record is built from the one before it.

1. Journal Book: every transaction is recorded in date order as a debit and credit entry
2. General Ledger: each entry is posted to its account, giving a balance per account
3. Trial Balance Sheet: the account totals are listed to check that debits equal credits
4. Work Sheet: starting from the trial balance, closing adjustments are made and the figures are sorted into balance-sheet and income-statement columns
5. Financial Statements: the balance sheet and income statement are drawn up from the work sheet

Answer (c)

Why not others:

• •(a) and (b) — start with the general ledger, but the ledger is posted from journal entries, so the journal must come first
• •(d) — puts the work sheet before the trial balance, but the work sheet begins with the trial balance figures

Key rule: Bookkeeping flows from the transaction record (journal) to the accounts (ledger), then checks (trial balance) before adjusting (work sheet) and reporting (statements).

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