Journal provides a permanent record of debit andcredit parts of a transaction--in chronological order.
However, a journal does not show, in one place, allthe changes in a single account.
If only a journal is used, a business must searchthrough all journal pages to find items affecting asingle account balance.
Instead, a form is used to summarize in one place allthe changes to a single account.
Consequently, after transactions are journalized, thejournal entries have to be copied, or posted, to theindividual accounts.
3
Chapter 5
Account Forms -- pg. 98Account Forms -- pg. 98
An account form is based on and includes the debitand credit sides of a T account.
In addition, space is provided for recording thetransaction date and journal page number.
The form also has Debit and Credit Balance columns.
Balance columns
4
Chapter 5
Chart of AccountsChart of Accounts
A list of all of the accounts
Each account title used also representsan account in a group of accounts.
Balance Sheet Accounts
Assets, Liabilities, Capital and Drawing Accts
Income Statement Accounts
Revenue and Expenses
5
Chapter 5
CHART OF ACCOUNTSCHART OF ACCOUNTS
page 99
Chart of Accounts--Accounts are arranged in the same order asthey appear on financial statements.Chart of Accounts--Accounts are arranged in the same order asthey appear on financial statements.
6
Chapter 5
Chart of Accounts--There are five general ledgerdivisions.Chart of Accounts--There are five general ledgerdivisions.
BALANCE SHEET ACCOUNTS
(100) ASSETS
110 Cash
120 Petty Cash
130 A.R. -- Kids Time
140 A.R. – Learn & Play
150 Supplies
160 Prepaid Insurance
(200) LIABILITIES
210 A.P. -- Ling Music
220 A.P. -- Sully Office Supp.
(300) OWNER’S EQUITY
310 Barbara Trevino, Capital
320 Barbara Trevino, Drawing
INCOME STATEMENT ACCTS.
(400) REVENUE
410 Sales
(500) EXPENSES
510 Advertising Expense
520 Insurance Expense
530 Misc. Expense
540 Rent Expense
550 Supplies Expense
560 Utilities Expense
Chart of Accounts--A three-digit account number is assigned toeach account. (The first number indicates the general ledgerdivision.)Chart of Accounts--A three-digit account number is assigned toeach account. (The first number indicates the general ledgerdivision.)
7
Chapter 5
ACCOUNT NUMBERSACCOUNT NUMBERS
page 92
8
Chapter 5
Numbering system is determined by sizeof company.Numbering system is determined by sizeof company.
BALANCE SHEET ACCOUNTS
(100) ASSETS
110 Cash
120 Petty Cash
130 A.R. -- Kids Time
140 A.R. – Learn & Play
150 Supplies
160 Prepaid Insurance
(200) LIABILITIES
210 A.P. -- Ling Music
220 A.P. -- Sully Office Supp.
(300) OWNER’S EQUITY
310 Barbara Trevino, Capital
320 Barbara Trevino, Drawing
INCOME STATEMENT ACCTS.
(400) REVENUE
410 Sales
(500) EXPENSES
510 Advertising Expense
515 Gasoline Expense
520 Insurance Expense
530 Misc. Expense
540 Rent Expense
550 Supplies Expense
560 Utilities Expense
570 Water Expense
New accounts are assigned the middle, unused account number between thenumbers of the existing accounts.New accounts are assigned the middle, unused account number between thenumbers of the existing accounts.
9
Chapter 5
Ledger
A group of accounts.
General Ledger
A ledger that contains all accounts needed to preparefinancial statements.
New VocabularyNew Vocabulary
10
Chapter 5
Account Number:The number assignedto an account.
File Maintenance: The procedure forarranging accounts in a general ledger, assigningaccount numbers, and keeping records current.
Opening an Account: Writing anaccount title and number on the heading of anaccount.
11
Chapter 5
1.Write the account title.
2.Write the account number.
General ledger accounts must beopened before they can be used.General ledger accounts must beopened before they can be used.
page 94
11
22
12
Chapter 4
Audit Your UnderstandingAudit Your Understanding
Describe the two parts of an account number.
The first digit indicates in which generalledger division the account is located. Thesecond and third digits indicate the location ofthe account within that division.
A journal entry which corrects an improperlyrecorded transaction.
33
Chapter 4
MEMORANDUMFOR A CORRECTING ENTRYMEMORANDUMFOR A CORRECTING ENTRY
page 108
34
Chapter 4
JOURNAL ENTRYTO RECORD A CORRECTING ENTRYJOURNAL ENTRYTO RECORD A CORRECTING ENTRY
page 108
44
Source Document
33
Credit
11
Date
22
Debit
November 13. Discovered that a paymentof cash for advertising in October wasjournalized and posted in error as a debitto Miscellaneous Expense instead ofAdvertising Expense, $140.00.Memorandum No. 15.
35
Chapter 4
Audit Your UnderstandingAudit Your Understanding
What is a correcting entry?
A journal entry made to correct an error in theledger.
When is a correcting entry necessary?
When a transaction has been improperlyjournalized and posted to the ledger.
36
Chapter 4
The phenomenal power of the humanmindThe phenomenal power of the humanmind
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I wasrdanieg. The phaonmneal pweor of the hmuan mnid! Aoccdrnigto a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaerinwaht oredr the ltteers in a wrod are, the olny iprmoatnt tihng istaht the frist and lsat ltteer be in the rghit pclae. The rset can bea taotl mses and you can sitll raed it wouthit a porbelm. Tihs isbcuseae the huamn mnid deos not raed ervey lteter by istlef, butthe wrod as a wlohe. Amzanig huh? Yaeh, and I awlyas thoughtslpeling was ipmorantt.
NOTE: I read this somewhere and I just had to pass it around. I donot know the origins of the text