Chapter 3 - The General Ledger Flashcards
Ledger Account Definition
An Accounting Record showing all transactions that effect a particular item
General Ledger Definition
The collective name for the main group of ledger accounts
Which side is the debit side and which side is the credit side of a ledger account?
The debit side the LHS while the credit side is the RHS
Rules of double entry
- Every transaction must be recorded in at least two ledger accounts
- Every transaction must be recorded on the debit side of at least one ledger and on the credit side of at least on other account
Asset, Liabilities and Owner’s Equity (Debits and Credit side)
An asset increase goes on the debit side (decrease credit side), A liability increase goes on the credit side (decrease debit side), Owner’s equity increase goes on credit side (decrease debit side).
Revenues and Expenses (Debits and Credit sides)
An increase in revenues goes on the credit side (decrease debit side), An increase in expenses goes on the debit side (decrease credit side).
Trial Balance defintion
A list of all the accounts in the General Ledger, and their balances, to determine if total debits equals total credits.
What are two errors revealed by the trial balance?
If two entries were recorded on the same side or if only one entry had been recored
What are two errors not revealed by the trial balance?
If a transaction has been omitted altogether, if debits and credit had been reversed.
What are the three steps to balancing a ledger account?
1.Totaling both sides then writing the larger of these two totals on both sides.
2. Calculating the balance by deducting the total of the smaller side from the total of the account
3. Entering this balance as a proper ledger entry, that is above the total on the smaller side and below the total on the larger side
