The Recording Process. Chapter 2. Accounting Principles, Ninth Edition. The Recording Process. Recording process is the steps & procedures that are used to help in preparing financial statements. Journalizing - Simple Entry. Journalizing - Entering transaction data in the journal.
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Accounting Principles, Ninth Edition
Recording process is the steps & procedures that are used to help in preparing financial statements.
Journalizing - Entering transaction data in the journal.
Illustration: On September 1, Ray Neal invested $15,000 cash in the business, and Softbyte purchased computer equipment for $7,000 cash.
Illustration: Assume that on July 1, Butler Company purchases a delivery truck costing $14,000. It pays $8,000 cash now and agrees to pay the remaining $6,000 on account.
Example : On April 1, Ragland established the lzon travel agency. The following transactions were completed during the month:
An Account can be illustrated in a T-Account form.
If Debits are greater than Credits, the account will have a debit balance.
If Credits are greater than Debits, the account will have a credit balance.
Accounts and account numbers arranged in sequence in which they are presented in the financial statements.
(2) Standard form (three column form/ Running balance form)This format is called the three-column form of account. It has three money columns—debit, credit, and balance. The balance in the account is determined after each transaction. Companies use the explanation space and reference columns to provide special information about the transaction. It has the following form: :
EX. The accounts in the ledger of Sanford Delivery Service contain the following balances on July 31, 2010.
Accounts Receivable $ 7,642 Prepaid Insurance $1,968
Accounts Payable 8,396 Repair Expense 961
Cash ? Service Revenue 10,610
Delivery Equipment 49,360 Sanford, Drawing 700
Gas and Oil Expense 758 Sanford, Capital 44,636
Insurance Expense 523 Salaries Expense 4,428
Notes Payable 18,450 Salaries Payable 815
Prepare a trial balance and fill in the missing amount for Cash.
SANFORD DELIVERY SERVICE
July 31, 2010
Limitations of a Trial Balance