Chapter7

Accoun/ng

Aim:Howdoyouopenageneralledgeraccountandposttransac/ons?DoNow:CopydowntheAim.•  Takeoutyourchapter7packet&Reinforcethe

MainIdeaJournal Ledger

Similari2

es

Diffe

rences

Trial Balance Limitations

Accoun/ngCycle

•  Step4-Postjournalentriestothegeneralledger

•  Step5-PrepareatrialbalanceAccount: AccountNum:

Date Descrip/on PostRef: Debit Credit Balance

QuickReview–Accoun/ngCycle

TheGeneralLedger•  Pos2ng–theprocessoftransferringinforma/onfromthejournaltoindividualgeneralledgeraccounts.

•  Ledger(akaGeneralLedger)–apermanentrecordorganizedbyaccountnumber– Some%mesknownasthebookoffinalentry

Pos%ngjournalentriestotheledgeraccountscreatesarecordoftheimpactoftransac%ons.

TheFour-ColumnLedgerAccountForm

•  LedgerAccountForms–informa/onaboutspecificaccountsisrecordedhere.– Accoun/ngsta/onaryisusuallydescribedbythenumberoftheiramountcolumns

•  Thenumberofcolumnsonlyreferstothethosecolumnsinwhichdollaramountsarerecorded

OpeningaGeneralLedgerAccount

•  Ageneralledgeraccountneedstobeopenedforeachaccountlistedonthechartofaccounts

•  TwostepstoopeningaGeneralLedgerAccount1.  Writetheaccountnameatthetopoftheledger

accountform2.  Writetheaccountnumberontheledgeraccount

form.

TheFour-ColumnLedgerAccountForm•  Entertheaccountname•  theaccountnumber•  thedate•  adescrip/onoftheentry•  thepos/ngreference.

The General Ledger

Problem7.1

•  Completeproblem7.1–OpeningLedgerAccounts– page167Ch.7packet– page94inworkbook

Youhave10minutes

Therearesixstepsrequiredforpos2ngjournalentriestoaledger:

1.EnterthedateofthejournalentryintheDatecolumn.

2.TheDescrip/oncolumnisusuallyle^blank,butcanbeusedtowriteinthesourcedocument.

3.EnterjournalleaerandpagenumberinPost.Ref.column.

4.EnterthedebitamountintheDebitcolumn.5.Computethenewaccountbalance.6.EntertheaccountnumberinthegeneraljournalPost.Ref.column.

7.Repeatsteps1-6forthecreditpartofthejournalentry.

The Posting Process

The Posting Process

Compu/ngaNewAccountBalance

RuleofThumb:•  DebitsareaddedtoDebits•  CreditsareaddedtoCredits•  Debitsandcreditsaresubtracted

•  Pg.174

Problem7.2

•  Pos/ngfromtheGeneralJournaltotheLedger– page175Ch.7packet– page95workbook

Aim:Howdoyouopenageneralledgeraccountandposttransac/ons?DoNow:•  Taketheworksheetfrommydesk.•  Readthedirec/ons.•  Waitforthenextstep.

Accoun/ngCycle

•  Step4-Postjournalentriestothegeneralledger

•  Step5-PrepareatrialbalanceAccount: AccountNum:

Date Descrip/on PostRef: Debit Credit Balance

Therearesixstepsrequiredforpos2ngjournalentriestoaledger:

1.EnterthedateofthejournalentryintheDatecolumn.

2.TheDescrip/oncolumnisusuallyle^blank,butcanbeusedtowriteinthesourcedocument.

3.EnterjournalleaerandpagenumberinPost.Ref.column.

4.EnterthedebitamountintheDebitcolumn.5.Computethenewaccountbalance.6.EntertheaccountnumberinthegeneraljournalPost.Ref.column.

7.Repeatsteps1-6forthecreditpartofthejournalentry.

The Posting Process

The Posting Process

Compu/ngaNewAccountBalance

RuleofThumb:•  DebitsareaddedtoDebits•  CreditsareaddedtoCredits•  Debitsandcreditsaresubtracted

•  Pg.174

Assignment

•  Withapartner,completeProblem7.5“Pos/ngGeneralJournalTransac/ons”.– Youwillusethejournalonpage98topostthetransac/onsintheledgersonpages99&100.

– Theaccountsarealreadyopensoyoudonotneedtoopenthemandpostthebalance.

•  Youhave15minutes.

Aim:HowdoIprepareatrialbalance?

DoNow:1.  Takeoutyournotebook&copytheAim2.  TakeoutProblem7.5

TrialBalanceprovestheledger

•  Accountantsusethebalancesinledgeraccountstocreatefinancialstatements(suchasthebalancesheet).

•  First,accountantsneedtoprovethatthedebitbalancesEQUALthecreditbalances.

WhatisaTrialBalance?•  TrialBalance–aformalwaytoprovetheledger.

•  Theformatofthetrialbalanceisatwo-columnschedulewithallthedebitbalanceslistedinonecolumnandallthecreditbalanceslistedintheother.

•  Atrialbalanceisalistofalltheaccountnamesandtheircurrentbalances.–  Allofthedebitbalancesareadded–  Allofthecreditbalancesareadded–  Thetotalsarecompared–  Ifthetotalsarethesame,thetrialbalanceisinbalance.

•  Thetrialbalanceisprepareda^erallthetransac/onsfortheperiodhavebeenjournalizedandpostedtotheGeneralLedger.

Trial Balance •  Key to preparing a trial balance is

making sure that all the account balances are listed under the “normal” column.

Assets Liabilities Owners Equity

✓ ✓ ✓ Revenue Expense ✓ ✓

Whatisthepurposeofatrialbalance?

•  Organizesaccountbalances•  Helpstoeasilylocateaccountbalances•  Detectanymathema/calerrorsintheledger

•  Provesthatthedebits=credits(provestheledger)

StepstoCreateaTrialBalance

1.Intheheading:–  Companyname–  TrialBalance– Date

2.Listallaccountsandtheirbalances(intheordertheyappearintheledger)

3.Totalthedebits4.Totalthecredits5.Doublerule(line)belowthetotals

Problem7.6inworkingpapers

•  Problem7.6–page103•  Page186intextbook

•  Followthestepstocreateatrialbalance

Whatifthedebitsdon’tequalthecredits?

•  IfthedebitsdoNOTequalthecredits->anerrorwasmade

•  Youneedtofindtheerror!

•  Mosttrialbalanceerrorscanbelocatedeasilyandquickly.

Stepstocorrectanerror

1.  Addthedebitandcreditcolumnsagain.

2.  Findthedifferencebetweenthedebitandcreditcolumns.

–  Ifthisamountis10,100,1,000etc.youprobablymadeanaddi/onerror.

–  Addthecolumnsagain.

Stepstocorrectanerror

3.  Checkiftheamountofbalancedifferenceisevenlydivisibleby9.

Transposi2onerror–occurswhentwodigitswithinanamountareaccidentallyreversed.Forexample,ifthedifferencebetweenyourdebitsandcredits=$27.Thatamountisdivisibleby9(27/9=3).Forexample,theamount$325mayhavebeenwriaen$352

Stepstocorrectanerror

4.  Checkifadecimalpointwasmovedbymistake.

Slideerror–occurswhenadecimalpointismovedbymistake.

Forexample,ifyouwrite$1,800aseither$180or$18,000youmadeaslideerror.

Correc/ngEntries•  Whenmistakesaremadeinaccoun/ng,oneruleapplies:

NEVERERASEAMISTAKE!

Threetypesoferrors:1.  Errorinjournalentrythathasnotbeen

posted2.  Errorinpos/ngtotheledgerwhenthe

journalentryiscorrect3.  Errorinjournalentrythathasbeenposted

Errorinjournalentrythathasbeenposted

•  Makeacorrec/ngentrytofixtheerror

1.  Makeanentryinthejournal2.  Postacorrec/ngentryintheledger

GotoProblem7.3inyourworkbook.