Michigan Residential Builders License Practice Test

Which term refers to the records that summarize information from journals?

1. Final entry books

2. General ledger

3. Income statement

4. Cash flow statement

The correct answer is: Final entry books

The term that refers to the records summarizing information from journals is the general ledger. The general ledger is a comprehensive record-keeping system that compiles all financial transactions recorded in the various journals, providing a complete view of a company's financial position. It organizes these transactions into specific accounts, which allows for easier tracking and reporting of financial data. This system is critical for businesses as it serves as the foundation for financial statements, ensuring all business activities are accounted for. While final entry books, income statements, and cash flow statements are important components of financial reporting, they do not specifically summarize journal entries in the same way that a general ledger does. The final entry books might refer to a format used for summarizing transactions, but they don’t capture the full scope of journal information as effectively as the general ledger.