Scribd
Upload
33 views2 pages

2 The Recording Process

Uploaded by

Ma. Franceska Loiz T. Rivera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
33 views2 pages

2 The Recording Process

Uploaded by

Ma. Franceska Loiz T. Rivera
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 2

The Recording Process

A. The Account.

An account is an individual accounting record of increases and


decreases in a specific asset, liability, or owner’s equity item.

An account consists of three parts:


1. The title of the account.
2. A left or debit side.
3. A right or credit side.

B. Debits and Credits.

The term debit indicates left and credit indicates right.


1. Assets, drawings, and expenses are increased by debits and
decreased by credits.
2. Liabilities, owner’s capital, and revenue are increased by credits
and decreased by debits.

C. Steps in the Recording Process.

The basic steps in the recording process are:


1. Identify the transaction from source documents.
2. Analyse each transaction for its effects on the accounts.
3. Enter the transaction information in a journal (book of original
entry).
4. Transfer the journal information to the appropriate accounts in
the ledger (book of accounts).

D. The General Journal/Journalising.

Entering transaction data in the general journal is called journalising.

The general journal:


1. Discloses in one place the complete effects of a transaction.
2. Provides a chronological record of transactions.
3. Helps to prevent or locate errors because the debit and credit
amounts for each entry can be readily compared.
4. A simple journal entry involves only two accounts (one debit and
one credit) whereas a compound journal entry involves three or
more accounts.

E. The Ledger.

The ledger is the entire group of accounts maintained by a company.


A general ledger contains all the assets, liabilities, and owner’s equity
accounts.

1. The ledger provides information about changes in specific


account balances for a company.

2. The ledger should be arranged in the order in which accounts are


presented in the financial statements, beginning with the
statement of financial position accounts.

F. Posting/Chart of Accounts.

1. Posting is the procedure of transferring journal entries to the


ledger accounts.
2. Posting involves the following steps:
a. In the ledger, enter in the appropriate columns of the
account(s) debited the date, journal page, and debit amount
shown in the journal.
b. In the reference column of the journal, write the account
number to which the debit amount was posted.
c. In the ledger, enter in the appropriate columns of the
account(s) credited the date, journal page, and credit
amount shown in the journal.
d. In the reference column of the journal, write the account
number to which the credit amount was posted.
3. A chart of accounts lists the accounts and the account numbers
that identify their location in the ledger. Accounts are usually
numbered starting with the statement of financial position
accounts followed by income statement accounts.

G. Trial Balance.

A trial balance is a list of accounts and their balances at a given time.


1. Its primary purpose is to prove (check) that the debits equal the
credits after posting.
2. It can be used to uncover errors in journalising and posting.
3. It is useful in the preparation of financial statements.

Reference:
Dr Anne Abraham
University of Western Sydney
Principles of Accounting
JOHN WILEY & SONS AUSTRALIA, LTD

2-1

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy