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