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College Accounting 11 th Edition

Please note: this presentation includes slide transitions and animations. To utilize the presentation features, launch the slide show and click to advance the slides and where appropriate, the animations will appear. 3. chapter. College Accounting 11 th Edition.

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College Accounting 11 th Edition

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  1. Please note: this presentation includes slide transitions and animations. To utilize the presentation features, launch the slide show and click to advance the slides and where appropriate, the animations will appear.

  2. 3 chapter College Accounting 11th Edition The General Journal and the General Ledger 3–2

  3. Learning Objectives After you have completed this chapter, you will be able to do the following:

  4. Learning Objective

  5. The General Journal • The process of recording business transactions in a journal is called journalizing. • In the journal, both the debits and the credits of the entire transaction are recorded in one place. • A journal is called a book of original entry because the first place an entry is recorded is in the journal. • Ajournal is a book in which business transactions are recorded as they happen. • Information about transactions come from source documents that furnish proof that a transaction has taken place. • The basic journal form is the two-column general journal. 3–5

  6. Transaction (a) – June1: J. Conner deposited $90,000 in a bank account in the name of Conner’s Whitewater Adventures. 3–6

  7. Decide which accounts should be debited and credited • Step 1: Decide which accounts are involved. • Step 2: Classify the accounts involved. • Step 3: Decide if the accounts involved are increased or decreased. • Step 4: Write the transactions as a debit to one account (or accounts) and a credit to another account (or accounts). • Step 5: Check to see if the equation is in balance. 3–7

  8. Analyze the Transaction Using the T- Account Approach increase increase J. Conner, Capital increases, so it is credited Cash increases, so it is debited 3–8

  9. Journal Entry 3: Debit account title 2: Date 1: Page number 3: Debit amount 4: Credit amount 4: Indent credit account title 5: Indent furtherexplanation 3–9

  10. Transaction (b) – June 2: Conner’s Whitewater Adventures bought equipment, paying cash, $38,000. Skip a line between entries in your homework 3–10

  11. The Cost Principle • When a business buys an asset, the asset should be recorded at the actual cost (the agreed amount of a transaction). • This is called the cost principle. • Assume in Transaction (c) that Signal Products had been asking $7,500 for the equipment. • The cost of the equipment to Conner’s Whitewater Adventures is $4,320, so that is the amount recorded. 3–11

  12. Transaction(c) – June 3: Conner’s Whitewater Adventures bought equipment on account from Signal Products, $4,320. Note that the month and year are not repeated unless they change or a new journal page begins 3–12

  13. Transaction (d) – June 4: Conner’s Whitewater Adventures paid Signal Products, a creditor, on account,$2,000. 3–13

  14. 3–14

  15. 3–15

  16. 3–16

  17. Posting to the General Ledger • The journal is the book of original entry because each transaction must first be recorded in full in the journal. • The ledger account gives us a complete record of the transactions recorded in each individual account. • The general ledger contains all the accounts. • The process of transferring information from the journal to the ledger is called posting. 3–17

  18. 3–18

  19. 3–19

  20. Practice Exercise 1 3–20

  21. 3–21

  22. 3–22

  23. Learning Objective 3–23

  24. The Posting Process • STEP 1. Write the date of the transaction in the account’s Date column. • STEP 2. Write the amount of the transaction in the Debit or Credit column, and enter the balance in the Balance column under Debit or Credit. • STEP 3. Write the page number of the journal in the Post. Ref. column of the ledger account. (This is a cross-reference; it tells you where the amount came from.) • STEP 4. Record the ledger account number in the Post. Ref. column of the journal. 3–24

  25.  Page number of the journal  Date of transaction  Amount of transaction  Ledger account number     3–25

  26.  Page number of the journal  Date of transaction  Amount of transaction  Ledger account number     3–26

  27. 3–27

  28. 3–28

  29. 3–30

  30. 3–31

  31. Computerized Accounting

  32. Practice Exercise 2 3–39

  33. Learning Objective 3–43

  34. Preparation of the Trial Balance • The trial balance is simply a list of accounts that have balances. • Even when the debit and credit balances are equal, other types of errors may slip through—for example, • Posting the correct debit or credit amounts to the incorrect account. • Neglecting to journalize or post an entire transaction. 3–44

  35. 3–45

  36. Steps in the Accounting Process • STEP 1. Record the transaction of a business in a journal. • STEP 2. Post entries to the accounts in the ledger. • STEP 3. Prepare a trial balance. 3–46

  37. Practice Exercise 3 3–47

  38. Learning Objective 3–48

  39. Source Documents 3–49

  40. 3–50

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