Journalizing & Posting Transactions (ch.4)

Book of original entry

the general journal

Trigger for analysis of what happened

source document

Trial balance

used to prove the equality of debits and credits in the ledger accounts - prepared whenever & help with financial statements

Simplest journal form is a

2 column general journal

Normal balances

ROLADE (credit/debit) increase, decrease, balance

Step 3 in Flow of Data

post entries in the journal to the General Ledger "Posting"

PR

posting reference - indicates journal page where entry was posted (use check mark if none)

Step 4 in Flow of Data

prepare a "Trial Balance" from the general ledger

Transposition error

2 digits are reversed - evenly divisible by 9

General ledger account

4 column account contains columns for debit or credit transaction and columns for debit/credit running balance - also columns for date, item description, posting reference

2 column general journal

5 number columns, only 2 amount columns (debit/credit)

"ALORE"

Chart of Accounts listing order - assets(1), liability(2), owner's equity(3), revenue(4), expenses(5)

Journalizing

act of entering into the journal with a 4-step process (date, account title & amount of debit, account title & amount of credit, explanation), with line skipped between each transaction

Source documents

begin process of entering transaction in the accounting system, serve as evidence/accuracy of business transactions (receipts, stubs)

General ledger

complete set of all the accounts used by a business - record of transactions entered into each account & numbered/arranged in same order as the chart of accounts

Posting

copying debits and credits from the journal to the ledger accounts - daily/frequently

Slide error

digit or 2 to the left/right when entered - evenly divisible by 9

Ruling method

draw single line through incorrect account title and wrote info directly above line - incorrect entry made before posting or posted to wrong account/amount

When is "correcting" written into the item column of the general ledger?

during this type of entry method

Compound entry

general journal input that affects more than 2 accounts - more than one debit and/or one credit

What account is a version of the T-account?

general ledger account

Correcting entry method

incorrect posting to wrong account but has been journalized, entry to reverse with explanation and post related accounts - written into item column

Cross reference

info in the PR columns of the journal and ledger provides this link between the 2

Step 1 in Flow of Data

input - analyzing transactions using source documents and chart of accounts

Which column is left blank in the ledger account?

item - unless for special reasons (indicating beg. balance, correcting, closing, adjusting, reversing)

What is entered in PR column on the journal?

ledger account number

Chart of Accounts

list of all accounts used by a business in numeric order - used to determine which accounts are affected by a given transaction

Step 2 in Flow of Data

processing - enter business transactions in the General Journal "Journalizing"