Topic 3 - General journal, General leger, Financial Statements Flashcards
GST excluded
no. x 0.1
GST included
no. / 11
General Ledger
T account
General Journal
date | description | credit | debit
Perpetual Inventory System
Trading stock is recorded as inventory
Advantages perpetual inventory system
- short term income statements can be prepared at any time
- possibility of running out of stock is reduced
- fast and slow moving inventory lines can be easily identified
Disadvantages perpetual inventory system
-more expensive
-loss of items
periodic inventory system
trading stock purchased is recorded in an expense ledger
Closing entries step 1. GJ
- debit income (sales, interest income)
- credit profit and loss
* transfer income to p+l - debit p+l
- credit expenses (cogs wages rent advertising)
* transfer expense to p+l - debit p+l
- credit capital
* transfer profit to capital - debit capital
- credit drawings
*transfer drawings
closing entries step 2. GL
make expenses, p+l, income. T account
expenses:……………….income:
put all expenses…….|..put all income
profit/capital = ………| line over total
income - expenses…|
line over total
Closing entries step 2 example
expenses. ………..P+L…….income
_________________________________________
cos 39200……………| sales 84,000
wages 24,000………| interest income 2000
rent 13,000………….|…. _________
advertising 700……|…….86,000
interest loan 1800.|
profit/capital 1000.|
___________
86,000
assets and expenses
are debited
liability owners equity and income
are credited
entries to commence business
put a e in debit
put l oe i in credit
should equal
what is a bad debt
amount of money owing to us that we will never receive
writing off bad debts GJ
d……| description…………..| debit……| credit
2/1…| bad debts (e)……….| 900……….|
………| gst payable (l) ……..| 90………. |
………|….acc receivable (a)|……………..| 990
writing off bad debts GL
up. accounts receivable. down
___________________________________________
1/2 Sales 660………| 30/6 bad debt 660
up. bad debts. down
___________________________________________
30/6 accounts receivable |
withdrawal of inventory by owner
drawings …….debited 500
…….inventory………………….. credited 500
withdrawal of cash by owner
drawings…….debited 500
…..cab…………………………….credited 500
advertising was recored as telephone. correct it
advertising…….debited 520
….telephone…………………….credited 520
*correction of telephone error
how to correction of errors
debit the wrong account it was put into
credit the correct account it should be in
* correction of correct account error
trial balance
account names | debit | credit
debit should equal credit
how to figure out where trial balance goes debit or credit
ledger accounts take the closing balance
highest - lowest = put in lowest acc for tb
eg. 25,000 D - 6600 C = 18400 in credit for trial balance
