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The General Journal and the General Ledger

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    1. 4-1

    2. The General Journal and the General Ledger Section 1: The General Journal Chapter 3 explained T accounts and the trial balance, and their usefulness in the preparation of financial statements. Chapter 4 introduces accounting journals, the general ledger, and shows how to use both. In the real world, transactions are not recorded using the accounting equation, nor are they recorded using T-accounts. Instead, businesses use a Journal to record business transactions. The first objective of this chapter introduces the general journal. Chapter 3 explained T accounts and the trial balance, and their usefulness in the preparation of financial statements. Chapter 4 introduces accounting journals, the general ledger, and shows how to use both. In the real world, transactions are not recorded using the accounting equation, nor are they recorded using T-accounts. Instead, businesses use a Journal to record business transactions. The first objective of this chapter introduces the general journal.

    3. 4-3 Here are the steps in the accounting cycle. The accounting cycle is a series of steps performed during each accounting period to classify, record, and summarize data for a business and to produce needed financial information. Here step 1 is to analyze transactions and step 2 is to journalize the data about transactions. Lets take a look at these steps in more detail.Here are the steps in the accounting cycle. The accounting cycle is a series of steps performed during each accounting period to classify, record, and summarize data for a business and to produce needed financial information. Here step 1 is to analyze transactions and step 2 is to journalize the data about transactions. Lets take a look at these steps in more detail.

    4. 4-4 Our first objective is to learn how to record financial transactions in the general journal. A journal is a book of original entry. Just like in school when you kept a diary or journal of your activities, a business journal does the same thing. The journal keeps a record of the businesss financial events in the order that they occurred. We call this chronological order. Journalizing means to record transactions in the journal. Our first objective is to learn how to record financial transactions in the general journal. A journal is a book of original entry. Just like in school when you kept a diary or journal of your activities, a business journal does the same thing. The journal keeps a record of the businesss financial events in the order that they occurred. We call this chronological order. Journalizing means to record transactions in the journal.

    5. 4-5 Here are the steps to take to record a journal entry.Here are the steps to take to record a journal entry.

    6. The General Journal and the General Ledger Section 2: The General Ledger The third objective of this chapter shows us how to post journal entries into accounts in the general ledger.The third objective of this chapter shows us how to post journal entries into accounts in the general ledger.

    7. 4-7 We learned how to journalize in our previous sectionthat was the second step in the accounting cycle, now lets learn the third step in our accounting cycle: posting to ledgers. A ledger is the record of final entry. It is the last place that accounting transactions are recorded. We learned how to journalize in our previous sectionthat was the second step in the accounting cycle, now lets learn the third step in our accounting cycle: posting to ledgers. A ledger is the record of final entry. It is the last place that accounting transactions are recorded.

    8. 4-8 When we transfer data from the general journal to the ledger, this is called posting. Its important that we keep a ledger so that we know at all times the cumulative balances in all of the accounts. T accounts represent the accounts in our ledger. All of our journal entries will update accounts in the ledger. A general ledger is a permanent, classified record of all accounts used in a firms operation. The general ledger is the master reference file for the business. When we transfer data from the general journal to the ledger, this is called posting. Its important that we keep a ledger so that we know at all times the cumulative balances in all of the accounts. T accounts represent the accounts in our ledger. All of our journal entries will update accounts in the ledger. A general ledger is a permanent, classified record of all accounts used in a firms operation. The general ledger is the master reference file for the business.

    9. 4-9 The Accounting Cycle Positing is the third step in the accounting cycle.Positing is the third step in the accounting cycle.

    10. 4-10 Ledger Account Forms The general ledger looks a lot like the general journal but it has two additional BALANCE columns. We will now be taking our general journal entries and transferring them to our ledger. The general ledger looks a lot like the general journal but it has two additional BALANCE columns. We will now be taking our general journal entries and transferring them to our ledger.

    11. 4-11 On the ledger form, enter the date of the transaction. Enter a description of the entry, if necessary. Usually, routine entries do not require descriptions. On the ledger form, enter the general journal page in the Posting Reference column. On the ledger form, enter the debit amount in the Debit column or the credit amount in the Credit column. On the ledger form, compute the balance and enter it in the Debit Balance column or the Credit Balance column. On the general journal, enter the ledger account number in the Posting Reference column. Five Steps for Posting Posting is the third objective of this chapter. Lets review the five steps of posting from the general journal to the general ledger.Posting is the third objective of this chapter. Lets review the five steps of posting from the general journal to the general ledger.

    12. 4-12 The general ledger contains all of the accounts that exist in a business and all of their activity. Balance sheet accounts are listed first, then the income statement accounts are listed next.The general ledger contains all of the accounts that exist in a business and all of their activity. Balance sheet accounts are listed first, then the income statement accounts are listed next.

    13. 4-13 Sometimes errors are made in journalizing or posting. If the accountant wants to correct an error, the correction method will depend on whether or not the journal entry has been posted yet to the general ledger.Sometimes errors are made in journalizing or posting. If the accountant wants to correct an error, the correction method will depend on whether or not the journal entry has been posted yet to the general ledger.

    14. 4-14 Here is one correction method.Here is one correction method.

    15. 4-15