Posting Journal Entries to General Ledger Accounts Section
- Slides: 26
Posting Journal Entries to General Ledger Accounts
Section 1 The General Ledger What You’ll Learn = The purpose of the general ledger. = How to open accounts in the general ledger.
Why It’s Important You examine the ledger to review how business transactions affect each account. Key Terms = general ledger = ledger account form
Setting Up the General Ledger In a manual accounting system, the accounts used by a business are kept on separate pages or cards. These pages or cards are kept together in a book or file called a ledger, which is often called a general ledger.
The Four-Column Ledger Account Form
Account Numbers General Ledger Division Location within General Ledger Division
Chart of Accounts for Roadrunner Delivery Service Balance Sheet Accounts (100) Assets 101 Cash in Bank 105 Accounts Receivable—City News 110 Accounts Receivable—Green Company 115 Computer Equipment 120 Office Equipment 125 Delivery Equipment (200) Liabilities 201 Accounts Payable—Beacon Advertising 205 Accounts Payable—North Shore Auto (300) Owner’s Equity 301 Maria Sanchez, Capital 302 Maria Sanchez, Withdrawals 303 Income Summary Income Statement Accounts (400) Revenue 401 Delivery Revenue (500) Expenses 501 Advertising Expense 505 Maintenance Expense 510 Rent Expense 515 Utilities Expense
The Four-Column Ledger Account Form
Opening an Account with a Zero Balance (1) (2) 1 Write the account name at the top of the ledger account form. Write the account number on the ledger account form. 2
Opening an Account with a Balance (1) Write the account name at the top of the ledger account form. (2) Write the account number on the ledger account form.
Opening an Account with a Balance (cont'd. ) (3) Enter the complete date (year, month, and day) in the date column. (4) Write the word “Balance” in the Description column.
Opening an Account with a Balance (cont'd. ) (5) Place a check mark in the Posting Reference column to show the amount entered on this line is not being posted from a journal. (6) Enter the balance in the appropriate balance column of the ledger account form.
Check Your Understanding 1. List the steps involved in opening an account with a zero balance. 2. List the steps involved in opening an account with a balance.
Section 2 The Posting Process What You’ll Learn = The purpose and importance of posting. = How often a business posts transactions. = The six steps in the posting process. = How to compute an account balance. = How to show an account with a zero balance.
Why It’s Important Posting brings the records of the business up-to-date. If a business did not post its transactions, the balances in ledger accounts would not be current. Key Terms = posting
The Fourth Step in the Accounting Cycle: Posting To provide a clear picture of how each account is affected by a business transaction, the information in a journal entry is posted to the general ledger accounts. General Journal Utilities Salaries Repairs Revenue
Posting from the General Journal to Ledger Accounts
Computing a New Account Balance = Debit amounts are added together. = Credit amounts are added together. = Debit and credit amounts are subtracted.
Section 3 Preparing a Trial Balance What You’ll Learn = The purpose of a trial balance. = How to prepare a trial balance. = How to identify and locate trial balance errors.
Why It’s Important To present accurate financial statements, the accounts must be in balance. The purpose of a trial balance is to prove that the general ledger is in balance. Key Terms = proving the ledger = slide error = trial balance = transposition error = correcting entry
The Fifth Step in the Accounting Cycle: The Trial Balance = A formal way to prove that debits equal credits is to prepare a trial balance. = Prepared on two-column accounting stationery. = Account numbers are listed in the far left column. = Account names are listed in the next column.
The Fifth Step in the Accounting Cycle: The Trial Balance (cont'd. ) = Debit balances are entered in the first amount column. = Credit balances are entered in the second amount column. = Adding all the debit balances, then adding all the credit balances, and finally comparing the two totals to see whether they are equal is called proving the ledger.
The Fifth Step in the Accounting Cycle: The Trial Balance (cont'd. )
The Fifth Step in the Accounting Cycle: The Trial Balance Name of the Company The Date the Trial Balance is completed
The Fifth Step in the Accounting Cycle: The Trial Balance The double underline signifies that the numbers have been added up and are correct!
Check Your Understanding What is the purpose of a trial balance?
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