Accounting Chap 4 Flashcards
Flow of Data
A. Analyze transactions using source documents and chart of accounts.
B. Enter transactions in the general journal in proper form.
C. Post entries to the accounts in the general ledger.
D. Prepare a trial balance from the general ledger.
A. Is a list of all accounts used by a business.
B. Arranged according to the accounting equation.
Chart of Accounts
Asset accounts begin with “_.”
1
Liability accounts begin with “_”
2
Owner’s equity accounts begin with “_”
3
Revenue accounts begin with “_”
4
Expense accounts begin with “_”
5
Are almost any document that provides information about a business transaction
Source Documents
Trigger the analysis of what has happened and Serve as evidence to verify the accuracy of accounting records.
Source Documents
provide objective, verifiable evidence of the transaction.
These documents could be important if anyone challenges the accuracy of the accounting records.
Source Documents
Referred to as a book of original entry
General Journal
- It is here that the first formal accounting record of a transaction is made.
- It shows the date of each transaction, the title of the account to be debited
and the account to be credited, and the amounts of the debit and credit.
General Journal
Named because it has only two amount columns, one for debit amounts and one for credit amounts
Two-column general journal
Contents of Two-column general journal
a) Column 1 – Date
b) Column 2 – Description
(1) The account(s) to be debited are listed first.
(2) The account(s) to be credited are indented and listed after the debits.
c) Column 3 – Posting Reference
d) Column 4 – Debit Amount
e) Column 5 – Credit Amount
three main questions to ask when analyzing a transaction
- What happened?
- Which accounts are affected?
Classify these accounts as assets, liabilities, owner’s equity, revenue,
or expenses. - How is the accounting equation affected?
Determine whether the accounts have increased or decreased.
Determine whether the accounts should be debited or credited.
Act of entering transactions in a journal
a) Enter the date.
b) Enter the account title and amount of the debit.
c) Enter the account title and amount of the credit.
d) Enter the explanation.
Journalizing
Journalizing
- Skip a line between transactions.
2. The four-step process is repeated for each transaction
A general journal entry that affects more than two accounts, thus having
more than one debit and/or one credit is called a ____
compound entry
Reminder: supplies and prepaid insurance are ___ because they provide
future benefits.
assets
A complete set of all of the accounts used by a business.
General Ledger
- Provides a complete record of the transactions entered into each account.
- Accounts are numbered and arranged in the same order as the chart of accounts.
General Ledger
General Ledger Account
- Date column
- Item column
- Posting Reference column
- Debit entry column
- Credit entry column
- Debit balance column
- Credit balance column
- Heading (account title and account number)
Copying the debits and credits from the journal to the ledger accounts.
Posting to the General Ledger
Posting to the General Ledger
In the ledger account:
a) Enter the date of the transaction in the Date column.
b) Enter the amount of the debit or credit in the Debit or Credit column.
c) Enter the new balance in the Balance columns under debit or credit.
d) Enter the journal page number from which each transaction is posted in the Posting Reference column.
e) The Item column is left blank except for special reasons (i.e., indicating the beginning balance, adjusting, correcting, closing, or reversing entries).
