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Rotman Commerce (1,103)
RSM100Y1 (287)
Lecture

4.The Journal.doc

7 Pages
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Department
Rotman Commerce
Course Code
RSM100Y1
Professor
Stojanovic Dragan

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Description
The Journal – ch. 4 The journal records all the details of a transaction in one place. (E.g. you have the date, the debit, credit entry, and explanation of each transaction recorded chronologically, that is, in the order that they took place.) The journal is the place where the details of the transaction are first recorded, so it is called the book of original entry. Journalizing – the process of recording each transaction. Advantages of keeping a journal: - The entire transaction is located at one place - It reduces errors or mistakes such as writing two debits for the same transaction - A chronological history of the transaction is given - It is easier to determine the volume of the business for an accounting period by looking at the number of entries - It is easy to have an idea of the day’s business role by just glancing at the journal Journal Recording Procedures: - The year and month are shown on each journal page - The debit is shown first - The credit is indented - The short explanation must includes an invoice or cheque numberDo: Page 112 Questions 1- 8 Exercises 1- 3 Posting to the Ledger The process of transferring info from the journals to the general ledger is called posting. (Pages 117-119) To record a transaction entry in the general ledger we use the three-column account or the balance column ledger account. Chart of Accounts – This is a list of the names and number of the accounts in the ledger. (E.g. 100-199: Assets, 200-299: Liabilities, 300-399: Owner’s Equity, 400-499: Revenue, 500-599: Expenses) P.R. (Posting Reference) – the information in the P.R. is good for cross-reference purposes, so that the transaction entries can be easily traced. Auditing – a systematic check of the accounting records, cross-referencing information in the P.R. tells the auditor to check the accuracy in the journal and posting entries. Opening the Books – it starts with opening entries which is entering the first transaction.B.F or C.F – What you put in Particulars in the general ledger when opening a new page. Forms of Trial Balance: The trial balance is a test to prove the mathematical accuracy of the ledgers if the debit is equal to the credit amount listed. (Page 127) - Formal Trial Balance: included the dates, names, account number - List Form of Trial Balance: no headings and no account names, just the balance of the accounts are listed. - Machine Tape Form of Trial Balance: A list of debit balances subtracts credit balances equal to 0. Possible Errors: 1. Not posting the entire transaction 2. Not posting either the debit or credit part of the transaction 3. Posting to the correct side but wrong account 4. Posting to the wrong side of the account 5. Incorrectly calculated the balance 6. Transposition figuresHow to locate Errors in the Trial Balance Page 126 Correcting Journal Entries To correct journal entries, do a reversal of the journal entry rather than correcting the difference. T
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