Accounting Chapter 4

Correcting Entry

In such a case, the incorrect journal entry should be corrected with an additional journal entry, called a correcting entry.

When is a correcting entry necessary?

When a transaction has been improperly journalized and posted to the ledger.

Under what condition will an account balance be credited?

Whenever the credits in an account exceed the debits.

Which column totals of a journal are posted?

Special amount columns

Account Number

The number assigned to an account

File Maintenence

The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.

List the two steps for opening an account

1.) Write the account title in the heading 2.) Write the account number in the heading

List the five steps of posting from the general columns of a journal to the general ledger

1.) Write the date in the Date column of the account. 2.) Write the journal page number in the post. Ref. of the account. 3.) Write the amount in the debit or credit column. 4.) Calculate and write the new account balance in the Balance debit or Balance credit column. 5.) Write the account number in the Post. Ref. column of the journal.

Ledger

A group of accounts

What is a correcting entry?

A journal entry made to correct an error in the ledger

General Ledger

A ledger that contains all accounts needed to prepare financial statements

Are the totals of the General Debit and Credit posted? Why or why not?

No. Each separate amount in the General Debit and General Credit columns of a journal is posted to the account written in the Account Title column.

Describe the two parts of an account number

The first digit indicates in the general ledger division the account is located. The second and third digits indicate the location within that division.

When an amount is journalized and posted as a debit to an incorrect expense account, why is the amount of the correcting entry credited to the incorrect expense account?

To show the decrease in this expense account.

When an amount is journalized and posted as a debit to an incorrect expense account, why is the amount of the correcting entry credited to the incorrect expense amount?

To show the increase in this expense account.

Posting

Transferring information from a journal entry to a ledger account

Under what conditions will an account balance be debited?

Whenever the debits in an account exceed the credits.

Opening an Account

Writing an account title and number on the heading of an account