Federal Nursing Home Administrator Practice Exam

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What does a general ledger summarize?

All asset transactions only
Entries from each journal for an accounting period
Revenue sources only
Liabilities and owner's equity

The correct answer is: Entries from each journal for an accounting period

A general ledger serves as the main accounting record for a business, summarizing all financial transactions throughout a specific accounting period. It compiles entries from various journals, which detail transactions such as sales, purchases, and expenses, and organizes these entries into categories, making it easier to track the financial health of the organization. The ledger maintains a comprehensive view by encompassing multiple types of transactions rather than focusing on just one aspect of the financial data. This means it includes not only asset transactions but also revenues, liabilities, and equity, thereby providing a complete picture of the entity's financial situation. By summarizing all relevant entries, the general ledger allows for the generation of financial statements and aids in effective financial management, reporting, and analysis.