POSTING TO THE GENERAL LEDGER Chapter 4 Chapter

POSTING TO THE GENERAL LEDGER Chapter 4

Chapter 4 Goals: Prepare a chart of accounts. Identify accounting practices related to posting from a journal to a general ledger. Post separate amounts from a journal to a ledger. Post column totals from a journal to a general ledger. Analyze and journalize correcting entries.

LESSON 4 -1 VOCAB TERMS Ledger – a group of accounts General ledger – a ledger that contains all accounts needed to prepare financial statements. Account number – the number assigned to an account. Opening an account – writing an account title & number on the heading of an account. File maintenance – procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current. Liquidity – the ease to which assets are converted to cash

The General Ledger Used to summarize all of the changes in a single account. The journal is the source of information. A separate ledger page is used for each account.

General Ledger & T-accounts

Opening an Account 1. 2. 3. Step 1 – write the account title Step 2 – write the account number Accounts are kept in number order according to classification.

Chart of Accounts Created using a ledger - A group of accounts. 3 digits are most commonly used, except for corporations use 4 digit #’s. 5 general ledger divisions: n n n Assets - 100’s – in order of liquidity Liabilities - 200’s – alphabetical order OE – 300’s – alphabetical order Revenue – 400’s – alphabetical order Expenses – 500’s – alphabetical order

Account Numbers 3 digits n n 1 st digit – general ledger division 2 nd & 3 rd digits – location within the general ledger Assigned in by 5’s or 10’s. Helps with file maintenance.

Chart of Accounts