BSB110 Lecture Notes - Lecture 4: Accounting Equation, Share Capital, General Ledger
Document Summary
A journal is a chronological record of all transactions. Discloses the complete effect of a transaction. The helps prevent errors as debit and credit amounts are easily compared. Because of the accounting equation, liabilities and equity are on the opposite side to assets. Because revenues increase equity, they have a credit nature. Because expenses decrease equity, they have a debit nature. Each transaction affects at least two accounts. Think about the analysis you did previously, as this will tell you which accounts are affected and for how much. You now also need to think for each of the accounts affected, does the account need to be debited or credited. Left side of the account is debit (dr) Right side of the account is credit (cr) Procedure of transferring journal entries to ledger accounts. After all transactions have been entered into the journal, each account must be balanced.
