Topic 2: Recording Transactions

Question 1

What is the Basic Accounting Cycle?

Answer 1

Transactions are Recorded in a JOURNAL
Posted to the LEDGER
Summarised in the TRIAL BALANCE
Reported in the FINANCIAL STATEMENTS

Question 2

What are the Key Elements of a Journal?

Answer 2

1. Debits MUST equal credits
2. There MUST be one debit account and one credit account
3. You post the account to the ledger then enter the account number in the Posting Ref column

Question 3

What is a Journal?

Answer 3

It is a record of financial transactions in order by date.

Question 4

What is a General Ledger?

Answer 4

It’s an account used to sort and store a company’s transactions.

Question 5

What is a Trial Balance?

Answer 5

It summarises the ledger accounts, in the same order of the ledger (A L OE CI D R E)