The Recording Process The Account is an accounting record of - - PowerPoint PPT Presentation

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The Recording Process The Account is an accounting record of - - PowerPoint PPT Presentation

Nov 01, 2022 190 likes •532 views

The Recording Process The Account is an accounting record of increases and decreases in a specific asset, liability, or owners equity item. The Journal is the book where the transactions are initially recorded in chronological order. It

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The Recording Process

The Account – is an accounting record of increases and decreases in a specific asset, liability, or owner’s equity item. The Journal – is the book where the transactions are initially recorded in chronological order. It is referred to as the book of original entry. The ledger – is the entire group of accounts maintained by a company.

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The Account

The account consists of three parts:

  • 1. A title
  • 2. A left or debit side
  • 3. A right or credit side
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Assets and Liabilities

Debits and Credits

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Stockholders’ Equity – Common Stock

Debits and Credits

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Stockholders’ Equity – Retained Earnings

Debits and Credits

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Stockholder’s Equity - Dividends

Debits and Credits

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Revenue and Expenses

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Debit / Credit Rule Summary

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Stockholders’ Equity Relationships

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Steps in the Recording Process

  • 1. Analyze each transaction for its effects on the accounts.
  • 2. Enter the transaction information in a journal – called journalizing.

The primary journal we will use is the general journal.

  • 3. Transfer the journal information to the appropriate accounts in the

ledger – called posting.

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Journalizing

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Simple and Compound Entries

Simple entries are those that involve only two accounts, one debit and

  • ne credit.

An entry that requires more than two accounts is called a compound entry.

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The Ledger

The ledger is the entire group of accounts maintained by a company. A general ledger contains all the asset, liability, and stockholder’s equity accounts.

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The Chart of Accounts

The chart of accounts is a listing of all the individual accounts used in the operation of a business. It is structured in accounting equation

  • rder –

Assets Liabilities Stockholders’ Equity Revenues Expenses

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The Chart of Accounts

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The Posting Process Posting is the transferring of the information in the journal entries to the General Ledger

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The Posting Process

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Recording Transaction 1

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Recording Transaction 2

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Recording Transaction 3

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Recording Transaction 4

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Recording Transaction 5

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Recording Transaction 6

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Recording Transaction 7

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Recording Transaction 8

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Recording Transaction 9

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Recording Transaction 10

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The General Journal

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Posted Transactions

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Trial Balance The Trial Balance is a list of all of the accounts in the general ledger and their balances at a given time.

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Preparing the Trial Balance

  • 1. List the account titles and their balances.
  • 2. Total the debit and credit columns.
  • 3. Prove the equality of the two columns.
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A Trial Balance

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Limitations

The Trial Balance does not prove that all the transactions have been recorded or that the entries have been made to the proper accounts.