Week 4

Contains a chronological list of transactions all in one place.

Does not tell business owner what the account balances are for each account.

Book of final entry; accumulates all entries to arrive at a final balance for all accounts

Process of transfer from journal to ledger is known as posting.

Account title and account number Date of transaction from journal Post Ref is page of journal Debit/Credit of transaction from journal Balance calculated from debit/credit posted

Record date and amount of transaction from the journal (debit or credit)

Record posting reference (journal page) Calculate new account balance by

extending debit or credit to right (think normal balance)

Record account number in Post Ref column of the journal page.

List of individual accounts and their debit or credit balance as taken from ledger.

Listed in same order as found in ledger. All accounts are listed, even accounts with a

zero balance. Total debit and credit columns to see if

debits equal credits. What if trial balance doesn’t balance?

What to check.◦ Omitted transaction.◦ Transaction entered incorrectly in journal.◦ Journal entry posted incorrectly in ledger.◦ A debit balance placed in credit column or a credit

balance placed in debit column of trial balance.

Amount of difference is 10 or 100 or 1,000 check your addition.

Difference equal to an account balance check if amount was omitted or not posted.

Divide difference by 2 and check for that amount in the higher column total. Check to see if a debit of that amount should have been a credit and vice versa.

Compare balance in trial balance to balances in ledger to check for copying errors.

Is difference evenly divisible by 9? If so may be a slide or transposition error.◦ $2,150.00 copied as $21.50◦ $2, 150 copied as $2,510

Recalculate balances in ledger accounts. Trace journal to ledger postings.

Business tracks transaction for a specified period of time known as the accounting period or the fiscal period.

At end of fiscal period the business needs to prove the equality of debits and credits.

Do the totals of all debit account balances equal total of all credit account balances?

This is done by preparing a trial balance. Must prepare trial balance before reporting

financial information in financial statements.

Questions?