Sage Computerised Accounting - Qp4

Explanation
The explanation for the given correct answer is that the Nominal Ledger does indeed contain numerous accounts and is considered the central system of the double entry bookkeeping procedure. The Nominal Ledger is where all financial transactions are recorded, classified, and summarized. It helps in maintaining accurate and up-to-date financial records and provides a clear overview of the organization's financial position. Therefore, it is true that the Nominal Ledger is a central component of the double entry bookkeeping system.

Explanation
The explanation for the given correct answer is that each account in the Nominal Ledger does not have its own Nominal Code. The Nominal Code is a five-digit number that is assigned to each account in the Nominal Ledger to give it an identity. Therefore, the statement is false.

Explanation
The range of nominal codes from 3000 to 3999 will indicate capital and reserves. These codes are typically used to categorize financial transactions related to capital investments, retained earnings, and other forms of reserves within an organization's accounting system. By assigning transactions to these specific codes, it becomes easier to track and analyze the financial health and performance of a company's capital and reserves over time.

Explanation
A nominal code between 6000 - 6999 typically represents direct expenses. Direct expenses are costs that can be directly attributed to the production of goods or services. These expenses are incurred in relation to the core operations of a business and include items such as raw materials, direct labor, and manufacturing overhead. Therefore, a nominal code falling within this range would indicate that the expenses recorded under that code are directly associated with the production process of the company.

Explanation
The default nominal codes are useful in computerized accounting because they provide a starting point for organizing and categorizing financial transactions. They are especially beneficial for businesses that are just starting out or transitioning to computerized accounting systems. These codes help streamline the process of recording and tracking financial data, making it easier to generate accurate financial reports and analyze business performance.

Explanation
Control Accounts are a set of nominal codes that cannot be amended or deleted. They are used to summarize and monitor the transactions in subsidiary ledgers, such as the sales ledger and purchase ledger. Control accounts provide a way to ensure accuracy and reconciliation between the subsidiary ledgers and the general ledger. They serve as a control mechanism and allow for easier identification and correction of errors. Therefore, the given statement is false.

Explanation
This statement is true because in accounting, the double-entry system requires that for every debit entry, there must be a corresponding credit entry of equal amount. This ensures that the accounting equation (Assets = Liabilities + Equity) remains balanced. If the total amounts entered as a 'Debit' do not equal the total amounts entered as a 'Credit', it would indicate an error in the accounting records. Therefore, it is necessary for the debits and credits to balance in order to maintain accurate financial records.

Explanation
The Profit and Loss Account does not show a list of all debit and credit balances. Instead, it shows the net profit or loss of a business over a specific period of time. The account summarizes the revenues, expenses, gains, and losses incurred during that period. It does not aim to balance debit and credit totals, unlike the Balance Sheet which presents the financial position of a business at a specific point in time.