Chapter 4 Objectives Define accounting terms related to
Chapter 4 Objectives: • Define accounting terms related to posting from a general journal to a general ledger • Identify accounting concepts and practices related to posting from a general journal to a general ledger • Prepare a chart of accounts for a service business organized as a proprietorship • Post amounts from a general journal to a general ledger • Prove cash • Analyze and journalize correcting entries CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4 -1 Preparing a Chart of Accounts CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
3 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns This form is referred to as the balance-ruled account form. The benefit of using the balance-ruled account form is that an up-todate account balance is always available. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
4 CHART OF ACCOUNTS page 92 • A group of accounts is called a ledger. • A ledger that contains all accounts needed to prepare financial statements is called a general ledger. • The name given to an account is known as an account title. • The number assigned to an account is called an account number. • A list of account titles and numbers showing the location of each account in a ledger is known as a chart of accounts. • A chart of accounts shows five general ledger divisions: (1) Assets, (2) Liabilities, (3) Owner’s Equity, (4) Revenue, and (5) Expenses. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
5 CHART OF ACCOUNTS CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning page 92 LESSON 4 -1
6 ACCOUNT NUMBERS page 92 • The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current is called file maintenance. • The account numbering system is determined by the size and nature of the business. • A new account listed between two existing accounts is assigned the middle, unused account number between the numbers of the existing accounts. • A new account listed at the end of a section is assigned the next number in the sequence of 10 s. • Expenses are listed in alphabetical order. • Assets are listed in order by their liquidity. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
7 OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 2 1 Writing an account title and number on the heading of an account is called opening an account. 1. Write the account title after the word Account in the heading. 2. Write the account number after the words Account No. in the heading. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
8 OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 2 1 • General ledger accounts must be opened before they can be used. • Each account is kept on a separate card. • Ledger cards are kept in chart of accounts number order. • A new card can be easily inserted for a new account. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
Lesson 4 -1 Log on to Aplia and let’s do Work Together 4 -1 on textbook page 95 and On Your Own 4 -1 on textbook page 95. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 4 -2 Posting from a General Journal to a General Ledger Transferring information from a journal entry to a ledger account is called posting. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
11 POSTING AN AMOUNT FROM THE DEBIT COLUMN OF A GENERAL JOURNAL page 96 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
12 POSTING AN AMOUNT FROM THE CREDIT page 97 COLUMN OF A GENERAL JOURNAL 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the credit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
13 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A DEBIT BALANCE page 98 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
14 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A CREDIT BALANCE page 99 2 5 1 3 4 1. Write the date. 2. Write the journal page number. 3. Write the debit amount. 4. Write the new account balance. 5. Return to the journal and write the account number. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
15 JOURNAL PAGE WITH POSTING COMPLETED page 100 Notice that the Post. Ref. Column has an entry for every line of the journal. (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
16 JOURNAL PAGE WITH POSTING COMPLETED page 100 (continued from previous slide) Notice that the Post. Ref. Column has an entry for every line of the journal. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -2
17 Lesson 4 -2 Log on to Aplia and let’s do Work Together 4 -2 on textbook page 101 and On Your Own 4 -2 on textbook page 101. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
LESSON 4 -3 Completed General Ledger, Proving Cash, and Making Correcting Entries CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
19 GENERAL LEDGER WITH POSTING COMPLETED page 102 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
20 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
21 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
22 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
23 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
24 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued on next slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
25 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued from previous slide) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
26 PROVING CASH page 106 Determining that the amount of cash agrees with the balance of the cash account in the accounting records is called proving cash. To prove cash, you should compare the cash balance as shown in the checkbook with the cash balance in the cash account. If the two balances equal, cash is proved. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
27 MEMORANDUM FOR A CORRECTING ENTRY page 106 When an error in a journal entry has already been posted, the incorrect journal entry should be corrected with an additional journal entry. A journal entry made to correct an error in the ledger is called a correcting entry. If an accounting error is discovered, a memorandum is prepared describing the correction to be made. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
28 JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 107 November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140. 00. Memorandum No. 15. 1 2 Date 4 Credit Debit Source Document 3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -3
Lesson 4 -3 Log on to Aplia and do Work Together 4 -3 on textbook page 108 and On Your Own 4 -3 on textbook page 108. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
30 Chapter 4 Assignments n. Study Guide (on Aplia) n. Problems: 4 -1, 4 -2, 4 -3, 4 -4, 45, and Using Source Documents (all on Aplia) CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4 -1
- Slides: 30