Chapter 7 - Posting Flashcards
What is a balance column account - same as three column account
The most commonly used type of account, in which there are three money columns, one due the debit amounts, one for the credit amounts, one for the amount of the balance
What is an accounting title?
The name I the item for which an account is prepared, entered at the top of the account page.
What is a correcting journal entry
An accounting entry to rectify the effort of an error
What I cross referencing
Recording if the page number in the General Ledger account and the recording of the account number in the journal
What is a decimal point error
A mistake caused by misplacing the decimal point in an amount
What is forwarding
The process of continuing an account or journal on a new page by carrying forward the date and the balance from the completed page
What is opening an account
The process of setting up a new account in the ledger
What is posting
The process of transferring the accounting entries from the journal to the ledger
What is a transposition error
A mistake causes by the swapping of digits when transferring figured from one place to another. The trial balance difference error will always be divisible by 9
What are the six steps in posting
IN THE LEDGER:
1) Turn to the proper account in the ledger.
2) Record the date.
3) Record the page number of the journal in the posting reference (P.R.) column of the account. Write the letter J (for journal) In front of the number. (E.g. J4)
4) Record the amount. Debit the amounts are entered in the credit columns.
5) Calculate and enter the new balance in the balance column. Indicate whether it is a debit or credit balance in the DR/CR column.
ONE STEP IN THE JOURNAL:
6) Record the account number to which the posting was made. Enter this in the posting reference (P.R) column on the same line as the amount being posted.
What do you do when you find an error immediately
Stoke nearly though incorrect figure
What do you do with errors found later
A “correcting journal entry” is an accounting entry that cancels the effect of the error of an Incorrect posting.
Quick test for detecting a single error - {1} multiple of 10
If the rural balance difference is a multiple of 10, an error in addition has likely been made.
Re-add the trial balance columns or re-calculate the balance of each account.
Quick test for detecting a single error - {2}
Check both the ledger and journal to see if the trial balance difference is equal to an amount entered in the ledger or the journal. Whenever you find such an amount, verify it to make sure that it has been handled correctly
Quick test for detecting a single error - {3} divide by 2
Divide the trial balance difference by 2. Search for the divided amount in the (1) trial balance, (2) ledger accounts. Debit could’ve been posted as a credit.
