Chapter 3
This presentation is the property of its rightful owner.
Sponsored Links
1 / 16

Chapter 3 PowerPoint PPT Presentation


  • 66 Views
  • Uploaded on
  • Presentation posted in: General

Chapter 3. Journalizing Transactions. Journals, Source Documents, and Recording Entries in a Journal. GAAP (Generally Accepted Accounting Practice) (principles) is to make a more permanent record by recording transactions in a journal

Download Presentation

Chapter 3

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -

Presentation Transcript


Chapter 3

Chapter 3

Journalizing Transactions


Journals source documents and recording entries in a journal

Journals, Source Documents, and Recording Entries in a Journal

  • GAAP (Generally Accepted Accounting Practice) (principles) is to make a more permanent record by recording transactions in a journal

  • A form for recording transactions in chronological order is called a journal

  • Recording transactions in a journal is called journalizing


Journals

Journals

  • The type of journal that is used is determined by nature of business and number of transactions

  • Five amt col.: General Debit, General Credit, Sales Credit, Cash Debit, Cash Credit

    • Page 57 - Journal


Special amount columns

Special Amount Columns

  • A journal amount column headed with an account title is called a special amount column. -- Used for frequently occurring transactions

  • Most transactions involve receipt or payment of Cash

  • A large number of transactions involve receiving cash from Sales

  • Special amount columns are used for Sales Credit, Cash Debit and Cash Credit

  • Eliminates writing an account title in the Account Title Column


General amount columns

General Amount Columns

  • A journal amount column that is not headed with an account title is called a general amount column.

    General Debit and General Credit


Benefits of a journal

Benefits of a Journal

  • Accuracy -- Debit and credit parts of each transaction are recorded in one place

  • Transactions are recorded in chronological order -- easy to locate

  • Information for each transaction recorded in a journal is called an entry

  • The recording of debit and credit parts of a transaction is called double-entry accounting

    Affects at least two accounts -- assures that debits equal credits


Source documents

Source Documents

A business paper from which information is obtained for a journal entry is called a source document.

  • Proves that the transaction did occur

  • Accounting concept: Objective Evidence – a source document is prepared for every transaction

    RULES

  • Transactions should be journalized only if it occurred

  • Amounts must be accurate and true

    • verify by comparing entry with source document.


  • Examples of source documents

    Examples of Source Documents

    PAGES 58-59

    • Check stub – describes information about the cash payment transaction

      • Checks – a business form ordering a bank to pay cash from a bank account.

        All cash payments are made by check

  • Invoice – a form describing the goods or services sold, the quantity, and the price. -- Prenumbered

    • Sales Invoice – an invoice used as a source document for recording a sale on account

      • Also called sales ticket or sales slip


  • Examples of source documents1

    Examples of Source Documents

    • Receipts – a business form giving written acknowledgement for cash received.

      • When cash is received from other sources other than sales, prepare a receipt -- Prenumbered

    • Memorandum – a form on which a brief message is written describing a transactions

      • Used when no other source document is prepared or when additional explanation is needed, Prenumbered

    • Calculator Tape – total amount of cash received from sales is printed on electronic calculator -- daily sales

      T12 – tape for twelfth day of the month --- page 75


    Recording transactions in a five column journal

    Recording Transactions in aFive-Column Journal

    Entry consists of 4 parts:

    • Date 2. Debit 3. Credit4. Source document

      DATE

      1st entry on journal page – must contain year, month, and day

      all other entries – must contain day only

      DEBIT

      Debits to cash – use special amount column

      Write amount

      CREDIT

      Credits to cash – use special amount column

      Credits to Sales – use special amount column

      All other credits -- Write title of account to be credited

      Write amount

      SOURCE DOCUMENT

      Write number in Doc. No. column

      Document number – a cross reference from the journal to the source document


    Proving and ruling a journal

    Proving and Ruling a Journal

    • After next to last line of journal page is used, columns are proved and ruled before totals are carried forward to next page.

    • Also at end of each month – prove and rule a journal


    Proving and ruling a journal lesson 3 4

    Proving and Ruling a Journal – Lesson 3-4

    PROVING A JOURNAL

    • Verify that total debits on the page equal total credits

      3 steps

      • add each of the amount columns

      • add the debit column totals, and then add the credit column totals

      • verify that the total debits and total credits are equal


    Ruling a journal page

    Ruling a Journal Page

    • Rule a single line across all amount columns directly below the last entry

    • On next line, write the date

    • Write the words Carried Forward in the Account Title column

      -- check mark in Post Ref column to show that nothing on this line needs to be posted

      4. Write each column total below the single line

      5. Rule double lines below the column totals across all amount columns


    Starting a new journal page

    Starting a New Journal Page

    • Column totals from previous page are carried forward to a new page

      • Write page number at the top of journal

      • Write the date – year, month and day

      • Write the words Brought Forward in the Acct Title Col. -- check mark in Post Ref

      • Record the column totals


    Completing a journal at the end of the month

    Completing a JournalAt the End of the Month

    • Prove last page

      -- debits equal credits

    • Prove cash

      Cash on hand at beginning of month 0.00

      plus total cash received during month (debit)+ 15,600.00

      Equals total= 15,600.00

      less total cash paid during month (credit)- 6,980.00

      Equal cash balance at the end of the month= 8,620.00

      (this should equal checkbook balance on the next

      unused check stub)= 8,620.00

      3. Rule journal


    Standard accounting practices

    Standard Accounting Practices

    • Page 77


  • Login