the accounting cycle. what we know so far… so far we know how to : identify and differentiate...
TRANSCRIPT
The Accounting Cycle
What we know so far…So far we know how to: Identify and differentiate balance sheet
and income statement accounts Manipulating transactions Create a general ledger using T accounts Create financial Statements But there are a few other steps in the accounting cycle that we must cover
The CycleBusiness Transactions Journalizing Beginning of Period
Journal posting Financial Statements Ledger Statement Trial Balance Prep.
The Journal A CHRONOLOGICAL Record of all parts of
a transaction in one document. Features the date, debit, credit and
most importantly, an explanation of each transaction
The main journal of a business is referred to as the General Journal
Journalizing This is the process of entering
transactions into a journal. Similar to entering transactions into a
general ledger.
Better than T-accounts! Using a general journal has all the
benefits of T-account ledgers but is FAR more organized.
Cash SalesOct 1 900 Oct1 900
Using a JournalGENERAL JOURNAL
Date Particulars PR Debit Credit20--Oct
1
Cash
9
0 0 00
Sales 9
0
0
00
Sold services to R. Heinz for cash
Steps to Journalizing Record the date – First entry must show
the Year, Month and day. For all other entries only the day of the month needs to be recorded
Record the debit Record the credit Record the explanation
Your Homework Pg. 114 questions 1-8 Pg. 115 questions 1-3 – Use your
workbook
And remember….
Where to go after the Journal Posting to the general Ledger is different
than when we post to the journal. As we know, the general journal is
where transactions are first recorded. After this, the transactions must be
broken out into their separate accounts in the ledger.
Balance-Column form The Journal entries are broken out into
what is called the Balance Column Form of Ledger.
Basically, it looks similar to the general journal, but with a column added onto it.
The third column is to keep a running total of a specific account.
Looks a little like this
Account Cash No. 100
Date Particulars P.R. Debit Credit DR.
CR. Balance
DR.
Posting to the LedgerThere are Six steps to remember:
Locate the account in the Journal. Cash, Accounts receivable etc.
Record the Date. Month and year need not be included, if they are already at the top.
Enter the amount
Posting steps continued Calculate the new balance in the
“Balance” Column
Last steps Complete the Ledger posting Reference
Column. This is literally the Journal page number. So if the transaction is recorded on the 10th page of the journal, you’d fill in J10 into this column.
Complete the journal posting Reference column.