chapter 4-1
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Chapter 4-1. Preparing a Chart of Accounts. 5-1. Journal provides a permanent record of debit and credit parts of a transaction--in chronological order. However, a journal does not show, in one place, all the changes in a single account. - PowerPoint PPT PresentationTRANSCRIPT
Chapter 4-1Chapter 4-1
Preparing a Chart of Accounts
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Chapter 5
5-15-1 Journal provides a permanent record of debit and
credit parts of a transaction--in chronological order.
However, a journal does not show, in one place, all the changes in a single account.
If only a journal is used, a business must search through all journal pages to find items affecting a single account balance.
Instead, a form is used to summarize in one place all the changes to a single account.
Consequently, after transactions are journalized, the journal entries have to be copied, or posted, to the individual accounts.
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Account Forms -- pg. 98Account Forms -- pg. 98 An account form is based on and includes the
debit and credit sides of a T account. In addition, space is provided for recording the
transaction date and journal page number. The form also has Debit and Credit Balance
columns.
Balance columns
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Chart of AccountsChart of Accounts
A list of all of the accountsEach account title used also
represents an account in a group of accounts.Balance Sheet Accounts
Assets, Liabilities, Capital and Drawing AcctsIncome Statement Accounts
Revenue and Expenses
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CHART OF ACCOUNTSCHART OF ACCOUNTS page 99
Chart of Accounts--Accounts are arranged in the same order as Chart of Accounts--Accounts are arranged in the same order as they appear on financial statements.they appear on financial statements.
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Chart of Accounts--There are five general Chart of Accounts--There are five general ledger divisions.ledger divisions.
BALANCE SHEET ACCOUNTS(100) ASSETS110 Cash120 Petty Cash130 A.R. -- Kids Time140 A.R. – Learn & Play150 Supplies160 Prepaid Insurance (200) LIABILITIES210 A.P. -- Ling Music220 A.P. -- Sully Office Supp.(300) OWNER’S EQUITY310 Barbara Trevino, Capital320 Barbara Trevino, Drawing
INCOME STATEMENT ACCTS.(400) REVENUE410 Sales(500) EXPENSES510 Advertising Expense520 Insurance Expense530 Misc. Expense540 Rent Expense550 Supplies Expense560 Utilities Expense
Chart of Accounts--A three-digit account number is Chart of Accounts--A three-digit account number is assigned to each account. (The first number indicates the assigned to each account. (The first number indicates the general ledger division.)general ledger division.)
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ACCOUNT NUMBERSACCOUNT NUMBERS page 92
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Numbering system is determined by Numbering system is determined by size of company.size of company.
BALANCE SHEET ACCOUNTS(100) ASSETS110 Cash120 Petty Cash130 A.R. -- Kids Time 140 A.R. – Learn & Play150 Supplies160 Prepaid Insurance (200) LIABILITIES210 A.P. -- Ling Music220 A.P. -- Sully Office Supp.(300) OWNER’S EQUITY310 Barbara Trevino, Capital320 Barbara Trevino, Drawing
INCOME STATEMENT ACCTS.(400) REVENUE410 Sales(500) EXPENSES510 Advertising Expense515 Gasoline Expense520 Insurance Expense530 Misc. Expense540 Rent Expense550 Supplies Expense560 Utilities Expense570 Water Expense
New accounts are assigned the middle, unused account number between the New accounts are assigned the middle, unused account number between the numbers of the existing accounts.numbers of the existing accounts.
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Ledger A group of accounts.
General Ledger A ledger that contains all accounts needed to
prepare financial statements.
New VocabularyNew Vocabulary
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Account Number: The number assigned to an account.
File Maintenance: The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current.
Opening an Account: Writing an account title and number on the heading of an account.
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1. Write the account title.2. Write the account number.
General ledger accounts must General ledger accounts must be opened before they can be be opened before they can be used.used. page 94
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Audit Your UnderstandingAudit Your Understanding
Describe the two parts of an account number.
The first digit indicates in which general ledger division the account is located. The second and third digits indicate the location of the account within that division.
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4-2 Posting4-2 PostingTransferring information from a
journal entry to a ledger account.
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PostingPosting Amounts in general amount columns of
the journal are posted individually. Amounts in the special amount columns
are posted as part of the total of the amount column.
There are five steps for posting an amount from a general debit column.
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the debit amount.5. Return to the journal and
write the account number.
POSTING AN AMOUNT POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMNFROM A GENERAL DEBIT COLUMN page 96
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POSTING A SECOND AMOUNT POSTING A SECOND AMOUNT TO AN ACCOUNTTO AN ACCOUNT page 97
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the debit amount.5. Return to the journal and
write the account number.
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POSTING AN AMOUNT POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMNFROM A GENERAL CREDIT COLUMNpage 98
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the credit amount.5. Return to the journal and
write the account number.
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Chapter 4
Audit Your UnderstandingAudit Your Understanding
List the five steps of posting from the general columns of a journal to the general ledger.
1. Write the date in the Date column. 2. Write the journal page number in the Post.
Ref. Column. 3. Write the debit amount in the Debit amount
col. 4. Write the new account balance in the
Balance Debit Column. 5. Return to the journal and write the account
number in the Post. Ref. Column.
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Audit Your UnderstandingAudit Your Understanding
Are the totals of the General Debit and Credit columns posted? Why or why not?
No. Each separate amount in the General Debit and General Credit columns of a journal is posted to the account written in the Account Title column.
Section 4 - 3Section 4 - 3Posting Column Totals
Chapter 4
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Posting Column Totals--pg. 100Posting Column Totals--pg. 100
The General Debit and General Credit columns are not special amount columns because the column headings do not contain the name of an account.
All separate amounts in these columns are posted individually.
Therefore, the column totals are not posted individually.
Place a check mark under the end-of-month total to indicate that the general amount columns are not posted.
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CHECK MARKS SHOW THAT CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTEDAMOUNTS ARE NOT POSTED page 100
Check mark indicates that amounts ARE NOT posted individually.
Check mark indicates that general amount column totals ARE NOT posted.
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Posting--pg. 101Posting--pg. 101 Only the totals of the special amount columns
are posted. 3-Special Amount Columns.
Sales Credit Cash Debit Cash Credit
Amounts in the special amount columns are posted as part of the total of the amount column.
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POSTING THE TOTAL POSTING THE TOTAL OF THE SALES CREDIT COLUMNOF THE SALES CREDIT COLUMN page 101
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the column total.5. Return to the journal and
write the account number.
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Chapter 4
POSTING THE TOTAL POSTING THE TOTAL OF THE CASH DEBIT COLUMNOF THE CASH DEBIT COLUMN page 102
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the column total.5. Return to the journal and
write the account number.
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POSTING THE TOTAL POSTING THE TOTAL OF THE CASH CREDIT COLUMNOF THE CASH CREDIT COLUMN page 103
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1. Write the date. 4. Write the new account balance.2. Write the journal page
number.3. Write the column total.5. Return to the journal and
write the account number.
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4-4 4-4 JOURNAL PAGE WITH POSTING COMPLETEDJOURNAL PAGE WITH POSTING COMPLETED page 105
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Audit Your UnderstandingAudit Your Understanding
Which column totals of a journal are posted?
Sales CreditCash Debit and Cash Credit
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4-4 Correcting Entry4-4 Correcting Entry
A journal entry which corrects an improperly recorded transaction.
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MEMORANDUM MEMORANDUM FOR A CORRECTING ENTRYFOR A CORRECTING ENTRY page 108
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JOURNAL ENTRY JOURNAL ENTRY TO RECORD A CORRECTING ENTRYTO RECORD A CORRECTING ENTRYpage 108
44Source Document
33Credit
11 Date 22 Debit
November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140.00. Memorandum No. 15.
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Chapter 4
Audit Your UnderstandingAudit Your Understanding
What is a correcting entry? A journal entry made to correct an error
in the ledger.When is a correcting entry necessary? When a transaction has been
improperly journalized and posted to the ledger.
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The phenomenal power of the The phenomenal power of the human mindhuman mind
I cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid! Aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn't mttaer inwaht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? Yaeh, and I awlyas thought slpeling was ipmorantt.
NOTE: I read this somewhere and I just had to pass it around. I do not know the origins of the text
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A Few Pictures to
Make You Smile!
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The EndThe End