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ลำดับตอนที่ #10 : [[R.S.]]Accounting Test::Chapter.7::29.11.11

Review Sheet of Accounting for

Chapter 7 Test* 29.Nov.2011

Chapter.7 :: Posting Journal Entries to General Ledger Accounts  [[Page.150]]

7-1 The General Ledger [[Page.152]]

-        An up-to-date ledger allows the accountant to provide management with information such as sales of products, service income, salary & commission expense

-        A general ledger is the group of accounts used by a business.

·       In a manual accounting system, the accounts are kept on separate pages/cards. These pages/cards are kept together in a book/file called a ledger.

·       In a computerized accounting system, the electronic files containing the accounts are still referred to as ledger, or the ledger accounts.

·       Posting journal entries to the ledger accounts creates a record of the impact of business transactions on each account used by a business.

-        In a manual accounting system, the accounts stationery used to record financial information about specific accounts is a ledger account form.

·       These forms are described by the number of amount columns (in which money amounts are recorded) they have. 

·       For example, a four-column account has the debit column, the credit column, the debit balance column, and the credit balance column. The type of account determines which balance column to use. (Ex. Asset use debit balance side)

-        Before journal entries can be posted, a general ledger account is opened for each account that appears on the chart of accounts.

·       There are 2 steps required to open an account with a zero balance:

1.     Write account name at the top of the ledger account form.

2.     Write account number on the ledger account form.

·       There are 6 steps to open an account with a balance:

1.     Write account name at the top of the ledger account form.

2.     Write account number on the ledger account form.

3.     Enter the complete date (year,month,day) in the date column

4.     Write the word ‘Balance’ in the Description column

5.     Place a check mark in the Posting Reference column to show the amount entered on this line isn’t being posted from a journal

6.     Enter the balance in the appropriate balance column of the ledger account form. Asset, expense, owner’s withdrawal accounts have debit balances while liability, owner’s capital, revenue accounts have credit balances.

-        To obtain info. about a specific business transaction, a manager might refer to the journal entry. To learn the current balance of important accounts, managers will look to ledger accounts.

7-2 The Posting Process [[Page.157]]

-        Posting is the process of transferring information from the general journal to individual general ledger accounts, the 4^th step in the account cycle.

-        The purpose of posting (from journal entry to general ledger) is to show the impact of business transactions on the individual accounts.

-        *read in the book for how to post from general journal to ledger account! Page 158*

-        Posting organizes business transaction details into the proper accounts. It summarizes all business transactions so managers can see the cumulative effects on certain accounts.

-        On a four-column ledger account form, each time you post to an account, you also compute a new account balance…following this rule of thumb

·       When the existing account balance is a debit, and

ð  the amount posted is a debit, ADD the amounts

ð  the amount posted is credit, SUBTRACT the amounts

·       When the existing account balance is a credit, and

ð  the amount posted is a debit, SUBTRACT the amounts

ð  the amount posted is a credit, ADD the amounts

-        When a ledger account has a zero balance, a line should be drawn across the center of the column – where the normal balance would appear.

7-3 Preparing a Trial Balance [[Page.166]]

-        Adding all the debit balances, then adding all the credit balances, and finally comparing the two totals to see whether they are equal is called proving the ledger.

-        A formal way to prove that debits equal credits is to prepare a trial balance. It is a list of all the account names and their current balances. The totals for credits and debits balance must be the same.

-        Finding errors when total debits don’t equal total credits:

1.     Add debit and credit columns again

2.     Find the differences between the debit & credit columns and add columns again

3.     Check if the amount you’re out of balance is evenly divisible by 9. If so, you might have

·       A transposition error = occurs when two digits within an amount are accidentally reversed, or transposed. (ex. $325 to $352)

·       A slide error = occurs when a decimal point is moved by mistake.

4.     Make sure that you have included all of the general ledger accounts in the trial balance.

5.     Check if one of account balances is recorded in the wrong column.

6.     Recomputed the balance in each ledger accounts.

7.     Check the general ledger accounts to verify that the correct amounts are posted from the journal entries.

-        When mistakes are made in accounting, NEVER ERASE AN ERROR.

-        There are 3 types of errors:

·       error in a journal entry that is not posted

·       error in posting to the ledger when the journal entry is correct

·       error in a journal entry that is posted

-        To correct the first two errors, you can just simply draw a line through the incorrect item and write the correction directly above.

-        When an error in a journal entry is discovered after posting, make a correcting entry to fix the error. *read page 168-169 to see a better picture*

Good luck on the first account test after such a long break na ka :D

Don’t forget where’s debit side where’s credit side na hahaha

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