CHAPTER 8B - THE JOURNAL

Question 1

What is The Journal used for?

Answer 1

To provide an audit trail for any transaction wihout documentary evidence

Corrections

Bad debt provisions and write offs

Depreciations

Question 2

When are journal entries posted?

Answer 2

After the trial balance has been prepared

Question 3

What is in a journal entry?

Answer 3

Date

Account Names (Debit first)

Narrative (under the account names)

DR and CR columns

NB No Balance Column

Question 4

What is a suspense account?

Answer 4

A holding area to log arithmetical differences on the Trail Balance until resolved

Question 5

How are arithmetical errors in the trial balance handled?

Answer 5

The difference between credits and debits (highest minus lowest) is put on whichever side is lower and in the Suspense account (on the same side)

As the differences are resolved, the suspense account is cleared down with the relevant entries until cleared (not forgetting to complete the double entry on the other relevant ledger account)