RSM100Y1 Lecture Notes - General Ledger, Trial Balance, Cheque

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20 Apr 2012
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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 number
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Do: 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.
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