Chapter 4: Journal and Ledger
advantages of the journal
1) complete transaction is recorded in 1 place 2) represents a chronological history of all of the business transactions 3) provides a convenient pictures of each day's business 4) makes it possible to determine the daily, weekly, or monthly volume of business and to identify busy periods more easily 5) the use of journal reduces error. They are easy to spot
Posting errors
1) not posting an entire transaction 2) not posting either the debit or credit part of the transaction 3) posting the correct side but wrong account 4) calculating the balance incorrectly 5) transposing fiugures
Journal
a record of transactions recorded in chronological order --> all parts of transaction in 1 place
Opening entry
a special entry which records the assets, liabilities, and owner's equity when a business first begins operations
Audit
a systematic check of accounting records and procedures by an accountant
source documents
any business form that serves as the original source of information that a transaction has occurred
4 parts of a journal entry
date, debit, credit(indented), explanations
charts of accounts
list of the names and accounts numbers of all accounts in the ledger
principle of objectivity
principle that requires objective evidence to support the value used to record transactions
balance column ledger
provides running balance on each line
Journalizing
recording of transaction in a journal
Ledger are numbered according to the
same order as accounts appear in the balance sheet and income statement
General journal
the main journal of business
posting
the transfer of information from the journal to ledger