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Accounting – Chapter Five Posting to the General Ledger A journal is used to record daily transactions. Problem - it does not show changes to each individual account. a separate form must be used Arranging Accounts in a General Ledger Vocabulary Ledger - a group of accounts

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Accounting – Chapter Five

Posting to the General Ledger


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Arranging Accounts in a General Ledger

Vocabulary

  • Ledger - a group of accounts

  • General Ledger - a group of accounts needed to prepare financial statements

  • Account title - the name given to an account

  • Account number - the number assigned to an account


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Arranging Account in a General Ledger -Preparing a Chart of Accounts

  • Chart of Accounts - A list of account titles and numbers showing the location of an account in a ledger.

  • Numbering – 3 digit #

    • first digit - general ledger division

    • second and third digits - location within a division

  • Initially assigned by 10s

    • new accounts can easily be added

    • generally kept in alphabetical order

  • File maintenance - the procedure for arranging accounts in a general ledger, assigning account numbers, and keep records current.


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Opening General Ledger Accounts

  • Opening an account

    • writing an account title and number on the heading of an account (ledger form)

  • Procedure:

    • Write the account title after the word ACCOUNT in the heading

    • Write the account number after the words ACCOUNT NO in the heading


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Posting from a Journal to a General Ledger

  • Posting - transferring information from a journal entry to a ledger account

  • Two Rules

    • General Amount Columns

      • posted individually to general ledger accounts

    • Special Amount Columns

      • not posted individually.

      • totals are posted are posted at the end of the month


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Posting Individual Amounts from the General Columns

  • Write the date in the general ledger

  • Write the journal page in the Post. Ref. column of the account in the general ledger

  • Write the debit or credit amount in the general ledger

  • Write the new account balance in the general ledger

  • Write the account number in the post. ref. column in the journal


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Figuring New Balances for Each Account...General Rules

  • The previous balance is a debit:

    • if the entry is a debit, add

    • if the entry is a credit, subtract

  • The previous balance is a credit:

    • if the entry is a debit, subtract

    • if the entry is a credit, add


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Posting the Totals of Amount Columns

  • General Debit and Credit columns are not posted individually

    • check marks are placed under the column totals to indicate that these totals are not posted.

  • Special Amount Columns (Sales Credit, Cash Debit, and Cash Credit

    • totals are posted only at the end of the month

    • the same procedure is used as is for posting individual amounts, except the account number is placed below the column totals in the journal


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