Question

The most important general ledger account included in and affecting several cycles is the:

A) cash account.
B) inventory account.
C) income tax expense and liability accounts.
D) retained earnings account.

Answer 1

The most important general ledger account affecting several cycles is the cash account, central to many transactions and reflecting changes across various business activities.

Step-by-step explanation:

The most important general ledger account included in and affecting several cycles, including National Accounts (Gross Domestic Product & its components), Flow of Funds, and International Accounts Production & Business Activity (including Business Cycles) is the cash account. The cash account is central to many transactions and reflects changes across various business activities. It impacts the reporting and analysis of the financial condition of the business, influencing key economic indicators like Prices & Inflation (including the Consumer Price Index, the Producer Price Index, and the Employment Cost Index). Furthermore, in financial accounting, the T-account structure represents the organization of accounts in the general ledger and illustrates how the cash account, as an asset, balances against the liabilities and net worth of a firm.