Mort 204 / Chapter 4: Journalizing and Posting Transactions

Via two-column general journal Column 2

Description

The journal provides a day-by-day record of business transactions. To determine the current balance of specific accounts, however, the information in the journal must be transferred to accounts similar to the T accounts . This process is called _____

Posting

Via two-column general journal Column 3

Posting Reference

_____ indicate that a journal entry has been posted to the general ledger.

Posting references

Receipt stubs, copies of receipts, cash register tapes, or memos of cash register totals

Provides information about: Cash receipts

Purchase invoices received from suppliers

Provides information about: Purchase of goods or services

Copies of sales tickets or sales invoices to customers or clients

Provides information about: Sales of goods or services

A check stub (or copies of chekcs) serves as a source document for what kind of transaction?

Provides information about: cash payment.

The journal or the first formal accounting record of a transaction.

book of original entry

A day-by-day listing of the transactions of a business. The purpose of a ______ is to provide a record of all transactions completed by the business. shows the date of each transaction, titles of the accounts to be debited and credited, and the amounts of the debits and credits.

journal

When using a computerized accounting system, the ______ are automatically posted to the ledger. To correct an error, the correcting entry method should be used.

journal entries

Entering the transactions day-by-day in a journal is called ___ For every transaction, the entry should include the date, the title of each account affected, the amounts, and a brief description.

journalizing

While the journal provides a day-by-day record of business transactions, the _______ provides a record of the transactions entered in each account.

ledger

An error that occurs when debit or credit amounts "slide" a digit or two to the left or right. For example, if $250 was entered as $25:

slide error

Any document that provides information about a business transaction. A ______ triggers the analysis of what happened (business transactions) . It begins the process of entering transactions in the accounting system ______ serve as objective evidence of business transactions. If anyone questions the accounting records, these documents may be used as objective, verifiable evidence of the accuracy of the accounting records. For this reason, ______ are filed for possible future reference.

source document

After the last step of the posting process, ______ After this step is completed, the posting references will indicate which journal entries have been posted to the ledger accounts.

step 5

An error that occurs when two digits are reversed. For example, if $250 was entered as $520:

transposition error

When the correct numbers are used but are in the wrong order, the error is called a

transposition.

A list used to prove that the totals of the debit and credit balances in the ledger accounts are equal. can be prepared daily, weekly, monthly, or whenever desired. Before preparing a ________, all transactions should be journalized and posted so that the effect of all transactions will be reflected in the ledger accounts.

trial balance

Via Flow of Data from Source Documents through Trial Balance Processing: From the general ledger, prepare a ___

trial balance

Even though the trial balance indicates that the ledger is in balance, the ledger can still contain errors

true

No entries are made in the Posting Reference column at the time of journalizing.

true

Source documents serve as historical evidence of business transactions.

true

When entering the credit item in a general journal, it should be listed after all debits and indented.

true

Tips for Finding Errors in the Trial Balance

1. Double check your addition. 2. Find the difference between the debits and the credits.

For liability, revenue, and capital accounts, a running balance is maintained by 1._____ the credit or 2.______ the debit from the previous balance

1. adding 2. subtracting

VIA general journal after posting For asset, expense, and drawing accounts, a running balance is maintained by 1.____ the debit or 2._____ the credit from the previous balance.

1. adding 2. subtracting

VIA POSTING PROCESS Posting a debit/credit in the 1. _____ Step 1 Enter the date of the transaction in the Date column Step 2 Enter the debit or credit Step 3 Enter the balance of the account. Step 4 Enter the journal page in the Posting Reference column. -------- In the 2. _____ Step 5 Enter the ledger account number in the Posting Reference column.

1. ledger account 2. Journal

Tips for Finding Errors in the Trial Balance via Finding the difference between the debits and the credits. Divide the difference by 2. If the difference is evenly divisible by 2, you may have posted 1._____ If a debit was posted as a credit, it would mean that 2. ______. The difference between the total debits and credits would be______ of the debit that was posted as a credit.

1. two debits or two credits for a transaction. 2. one transaction had two credits and no debits 3. twice the amount

A revenue account will begin with the number ___ in the chart of accounts.

4

contains columns for the debit or credit transaction and columns for the debit or credit running balance. In addition, there are columns for the date, description of the item, and posting reference.

A four-column general ledger account

To purchase an asset such as office equipment on account, you would credit which account?

Accounts Payable

When fees are earned and the customer promises to pay later, which account is debited?

Accounts Receivable

Name the five types of financial statement classifications for which it is ordinarily desirable to keep separate accounts.

Assets, Liabilities, Owner's Equity, Revenues and Expenses.

In what order are the accounts customarily placed in the ledger?

Assets, Liabilities, Owner's Equity, Revenues, and Expenses.

Via two-column general journal Column 5

Credit amount

Via two-column general journal Column 1

Date

Via two-column general journal Column 4

Debit Amount

1. Analyze what happened (business transactions) by using information from source documents and the firm's chart of accounts. 2. Enter business transactions in the general journal in the form of journal entries. (journalizing) 3. Post these journal entries to the accounts in the general ledger. 4. Prepare a trial balance.

Flow of Data from Source Documents through Trial Balance

Via Flow of Data from Source Documents through Trial Balance Processing: Enter business transactions in the ___

General journal Journalizing

Via Flow of Data from Source Documents through Trial Balance Processing: Post the entries in the journal to the _____

General ledger Posting

Via Correcting entries: Generally, "Correcting" is written in the _____ of the general ledger account.

Item column

Which of the following is not a source document?

Journal entry

Via Flow of Data from Source Documents through Trial Balance Input : Analyze transactions using ____

Source documents and chart of accounts

1. Enter the date 2. Enter the debit ( accounts to be debited are entered first) 3. Enter credit 4. Enter explanation

Steps in the journalizing process to journalize a business transaction in a general journal

the primary advantage of the _____ is that the debit and credit sides of the account are easier to identify

T account

___ column is used to indicate the journal page from which an entry was posted, or a check mark (✓) is inserted to indicate that no posting was required.

The Posting Reference

___ determines the order for listing accounts in the general ledger and trial balance. This order may also be used when preparing financial statements.

The chart of accounts

When an incorrect entry has been journalized and posted to the wrong account, a correcting entry should be made. Answer

True

Tips for Finding Errors in the Trial Balance via Finding the difference between the debits and the credits. Divide the difference by 9. If the difference is evenly divisible by 9, you may have committed_____ .

a slide error or a transposition error

A list of all accounts used by a business. _____ includes the account titles in numeric order for all assets, liabilities, owner's equity, revenues, and expenses. is used in classifying information about transactions.

chart of accounts

A general journal entry that affects more than two accounts.

compound entries

An entry to correct an incorrect entry that has been journalized and posted to the wrong account.

correcting entry

For example, assume that a $400 payment for Rent Expense was incorrectly debited to Repair Expense and correctly credited to Cash. This requires a ____

correcting entry

The information in the Posting Reference columns of the journal and ledger that provides a link between the journal and ledger.

cross-reference

The chart of accounts lists capital accounts first, followed by liabilities, assets, expenses, and revenue

false (a, l, oe, r, e)

A complete set of all the accounts used by a business. ______ accumulates a complete record of the debits and credits made to each account as a result of entries made in the journal

general ledger

The primary advantage of the ______ is that it maintains a running balance.

general ledger account

the heading for the _____ has the account title and an account number. The account number is taken from the chart of accounts and is used in the posting process.

general ledger account

An account with columns for the debit or credit transaction and columns for the debit or credit running balance.

general ledger account.

Copying the debits and credits from the journal to the ledger accounts.____ from the journal to the ledger is done daily or at frequent intervals. ______ is simply the process of copying the exact dates and dollar amounts from the journal to the correct ledger accounts

posting

A journal with only two amount columns, one for debit amounts and one for credit amounts.

two-column general journal

the simplest journal form is a

two-column general journal

Tips for Finding Errors in the Trial Balance via Finding the difference between the debits and the credits. If the difference is equal to the amount of a specific transaction, perhaps_____ of this transaction.

you forgot to post the debit or credit portion