Florida General Contractor Practice Exam

What signifies that the General Ledger has been correctly completed?

1. All transactions are recorded accurately

2. It contains only sales transactions

3. There are no discrepancies in cash flow

4. Only income is recorded

The correct answer is: All transactions are recorded accurately

The indication that the General Ledger has been correctly completed primarily revolves around the accurate recording of all transactions. A correctly maintained General Ledger should encompass a comprehensive set of financial activities, which includes income, expenses, assets, liabilities, and equity transactions. When all transactions are recorded accurately, it ensures that the financial statements derived from the General Ledger will truly reflect the financial position and performance of the business. Accurate recording is essential for financial reporting, analysis, and compliance with accounting standards. Focusing solely on sales transactions would not provide an accurate or complete picture of the company's financial status, as it would omit vital information related to expenses and other financial activities. Similarly, while having no discrepancies in cash flow is important, it does not necessarily mean that all transactions have been accurately captured in the General Ledger. Lastly, recording only income ignores the critical aspects of expenses and liabilities, which are essential for a holistic representation of the business's financial health. Thus, the correct completion of the General Ledger is signified by the accurate and comprehensive recording of all transactions.