accounting record This is a topic that many people are looking for. thetruthaboutdow.org is a channel providing useful information about learning, life, digital marketing and online courses …. it will help you have an overview and solid multi-faceted knowledge . Today, thetruthaboutdow.org would like to introduce to you Maintaining Accounting Records. Following along are instructions in the video below:
“Is the act of sorting and recording information accounting procedures can help you manage the the huge amount of information that a business can generate accounting records sort and categorize data into groups of information that are meaningful to stakeholders of the business. A successful and active business may encounter hundreds of transactions in a single period. What s the best way to handle incoming data the efficiency of the accounting process starts. With accurate and well organized data therefore a clear understanding of procedures is important in the previous lectures.
We already learnt about the different business transactions and how they are to be recorded in this lecture. We will go through these books of accounts. The books of accounts in a business generally consists of three key books. These are the general journal.
General ledger and the trial balance. These three tools work together to record and maintain all the financial transactions of a business. Let s look at each of these in detail when a transaction is carried out it is first recorded in the general journal. The general journal keeps track of all the transactions in a chronological order these transactions.
When recorded in the general journal are called entries and the process of recording entries is called journalizing. The general journal is formatted to help you keep transaction data well organized it shows the effects of each transaction on the accounts of the business. The general journal is designed on the principles of the double entry accounting system. Where entries are recorded by debiting one or more accounts and crediting.
Another one or more accounts with the same total amount the total amount debited and the total amount credited should always be equal thereby ensuring the accounting equation is maintained. While the format of the general journal may vary slightly it generally has five columns as shown on screen. The first column is the date where the date of the transaction is recorded in the second column. We record the titles of the accounts that are being debited or credited.
Generally the account to be credited will be indented the next two columns..
Contain the debit and credit amount for each transaction. The last column called notes contains an explanation of the transaction. Let s take a few transactions at web design. Inc.
And see how they will be recorded in the general journal for review the transactions are listed on screen in the first transaction david invest 10000 in the business remember that the two accounts affected are cash and the capital account cash. Which is an asset has increased so the cash account will be debited capital. Has also increased so the capital account will be credited the journal entry is shown on screen in the second transaction david purchases. A laptop for 800.
The two accounts affected a cash account and laptop. Account. The laptop has come in and the cash has gone out. So the cash account will be credited and the laptop account is debited.
The journal entry is shown on screen similarly all transactions will be recorded in the general journal to view the general journal for all the transactions at web design. Inc. Please refer to the document titled case. Study with solution.
Once. A transaction is entered into the general journal. The accounting process does not end. There.
The information from the general journal is reorganized and third are posted in the general ledger in the general ledger..
A separate account is maintained for each item for example. There will be a separate account for rent electricity office supplies customers and so on in the general ledger. All the information for each item is grouped and organized by accounts here you can see the effects of various transactions by account and also the final balances of each account. We have already learnt about these accounts by posting entries in the general journal in the following screens.
We will learn about how the transactions are posted from the general journal to the general ledger on screen you can see a common format of the general ledger. The first column includes date the second column contains a description of transaction third and fourth columns of a debit and credit depending on whether the amount in the transaction is debited or credited the last one shows the balance of the account after the transaction has been posted let s now take a transaction at web design inc to see how it is posted in the general. Ledger let s take the first transaction where they will invest 10000. In the business.
We have a journal entry for this transaction. Where the cash account is debited and the capital account. Is credited this entry will be posted in two ledger accounts. Namely the cash account and the capital account.
Let s now enter. The second transaction. Where david purchases. A laptop for 800 in this transaction.
The laptop account is debited and the cash account is credited this entry will be posted in two ledger accounts. Namely the cash account and the laptop account note that in the cash account. The balance has now reduced to nine thousand two hundred dollars similarly. We can record all the transactions of the business in the general ledger.
You can find the complete general ledger..
For all the transactions at web design. Inc. In the document titled case. Study with solution.
Once the transactions have been recorded in the general ledger and the general journal. The accountant needs to be sure that the ledger account. He or she has repaired are correct in respective amount side balance etc to check the accuracy of transactions posted in the ledger. A statement is prepared this statement is called trial balance you also know that accounts are prepared by applying the double entry system.
In which each transaction is recorded on the debit and the corresponding credit side for the same amount therefore the total of debit balances of different accounts must be equal to the total of credit balances in the ledger accounts. The balances will always match. If the transactions have been correctly posted in the ledger in case of a mistake. The totals will be different since the trial balance.
Contains the balances of all the ledger accounts. It is finally used to create the financial statements of the business. Such as the income statement and the balance sheet. The general journal.
General ledger and the trial balance form an integral part of the recording process within the accounting system as you can see on screen. The trial balance has three main columns. The first column contains the title of the account from which the balance is taken there are two more columns they are debit column containing debit balances and credit column containing credit balances the debit column total is compared with credit column total. If the totals in both the columns are same it implies that ledger accounts are arithmetically accurate on screen.
You can see the trial balance of web design inc..
As you can see the trial balance. Has been prepared on july 31st. This means that the balances from all the ledger accounts as on july 31st will be taken the account such as unknown revenue rent payable etc. Do not show any debit or credit balance because these accounts have zero balance in reality accounts with zero balances will not appear in the trial balance.
Altogether. Finally both the debit and credit balances are matching. Which is an indication that the accounts have been posted correctly. If the accounts are prepared manually the trial balance will usually not match.
Which will force the accountants to identify the problems to resolve the issues. Adjusting entries may need to be recorded to correct. The problems. The corrected trial balance is called the adjusted trial balance.
And is used to prepare the financial statements as we learn that when we post a transaction. The information needs to be moved from the general journal to the general ledger and then to the trial balance this sounds like a tedious job. However most of the accounting software in use today makes this job super. Easy you only need to record a transaction once and from there.
It is automatically populated in all the books of accounts with this automation. The trial balance is always balanced in fact you can even take a print of your financial statements at the end of ” ..
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