Chapter 6 - Accounting Books - Journal and Ledger PDF

Preview

Summary

Chapter 6 - Accounting Books - Journal and Ledger...

Description

CHAPTER 6 – ACCOUNTING BOOKS – JOURNAL AND LEDGER

•

Learning Competencies The learners should be able to...

•

1. Differentiate the journal from the general ledger 2. Determine the normal balance of an account 3. Prepare journal entries to record basic business transaction 4. Determine balances of accounts using the T-account Introduction Concepts Recall

o

o

o o

o

Business transactions are first recorded in the journal ("book of original entries") — subsequently, the effects of the transactions on the accounts are posted to the ledger ("book of secondary entries") Special journals are used to record transactions of a similar nature ▪ Examples of special journals: 1. Sales journal - used to record sales on account 2. Purchases journal - used to record purchases of inventory on account 3. Cash receipts journal - used to record all transactions involving receipts of cash 4. Cash disbursements journal - used to record all transactions involving payments of cash Transactions that cannot be recorded in the special journals are recorded in the General journal The General ledger contains all the accounts appearing in the trial balance — the Subsidiary ledger provides a breakdown of the controlling accounts in the general ledger An account is the basic storage of information in accounting — it is a record of the increases and decreases in a specific item of asset, liability, equity, income, or expense ▪ An account may be depicted through a "T-account," which is called as such because it resembles the letter "T" ▪ A "T-account" has three parts, namely: 1. Account title - describes the specific item of asset, liability, equity, income, or expense 2. Debit side - the left side of the account 3. Credit side - the right side of the account

o

• •

The difference between the monetary totals of debits and credits in an account represents the ending balance of that account ▪ The minimum ending balance of an account is zero — this occurs when the total debits equal the total credits in an account

Recording, Classifying and Summarizing Chapter 6 Summary...