Journal Entries

Question 1

Why is it important to record transactions?

Answer 1

1. You can create and use financial reports to measure the performance of your business.
2. To manage cash flow.
3. To keep things organized.
4. Useful at tax time.
5. In case of audits.

We do this by bookkeeping.

Question 2

What are some examples of bookkeeping software?

Answer 2

Cheap: Google Sheets and Excel

Mid: Quickbooks, Xero and Freshbooks

High: Sap and Oracle

Question 3

What is a Journal Entry?

Answer 3

A record of a financial transaction.

Question 4

What does a Journal Entry look like?

Answer 4

Journal Entry
J/E Number:1

Date Account Debit Credit
————————————————
1Sep Cash 100
Owners Equity 100
Initial Investment
————————————————

Question 5

What are the two types of Journal Entries?

Answer 5

Automatic Journals and Manual Journals.

Question 6

What is an Automatic Journal?

Answer 6

Only exists when you’re using accounting software.

Saves time posting automatically behind the scenes.

Question 7

What is a Manual Journal?

Answer 7

Typically only used for Adjusting Journal entries and unique transactions.

Question 8

RECAP

What is bookkeeping?

Answer 8

The recording of all financial transactions.

Question 9

RECAP

A Journal Entry is a ….?

Answer 9

Record of a financial transaction.

Question 10

RECAP

What must the totals of the Debit and Credit columns always do?

Answer 10

They ALWAYS match.

Question 11

RECAP

Automatic Journal Entries are……?

Answer 11

Used in accounting software to save time.

Question 12

RECAP

Manual Journal Entries are……?

Answer 12

Used for Adjusting Journal Entries and unique transactions.