Chapter2-TheRecordingProcess
.pdf
School
Maastricht University**We aren't endorsed by this school
Course
EBC 2176
Subject
Accounting
Date
Jan 3, 2025
Pages
6
Uploaded by PrivateAtom15879
Chapter 2 The Recording Process1Chapter 2 - The Recording ProcessSummary of Debit/Credit RulesThe JournalAnalyse each transaction in terms of its effect on the accounts (chapter 1Enter the transaction information in a journalTransfer the journal informationto the appropriate accounts in the ledgerSummary Illustration of Journalising and Posting
Chapter 2 The Recording Process2
Chapter 2 The Recording Process3The LedgerThe ledgeris the entire group of accountantsmaintained by a company.The ledger provides the balancein each of the accounts as well as keeps track of changesin these balances.A general ledger contains all the asset, liability and equity accounts.PostingPosting is the procedure where the journal entriesare transferred → into ledgeraccounts.This has to be done with the following steps:
Chapter 2 The Recording Process4In the ledger, in the appropriate columns of the account(s) debited, enter the date,journal page and debit amount shown in the journal.In the reference column of the journal, write the account number to which the debitamount was posted.In the ledger, in the appropriate columns of the account(s) credited, enter the date,journal page and credit amount shown in the journal.In the reference column of the journal, write the account number to which the creditamount was posted.The Trial Balance It is a list of accountsand their balancesat a given time Companies prepare a trial balance at the endof an accounting period Debit balances appear ← in the left column and credit balances in the → right columns and they have to be equal Additionally, the trial balance is a necessary checkpoint for uncovering certain types of errors. Steps for preparing a trial balance are:List the account titles and their balances in the appropriate debit or credit columnTotal the debit and credit columnsVerify the quality of the two columns
Chapter 2 The Recording Process5Errors can still occur, even with the trial balance!The trial balance does not provethat the company has recorded ALL transactionsorthat the ledger is correct.Common errorsin trial balances: A transaction is notjournalisedA correct journal entry is not postedA journal entry is posted twiceIncorrect accounts are used in journalising or postingOffsetting errors are made in recording the amount of a transactionHelpful steps to locate errorsThe error is …
Chapter 2 The Recording Process610x multiplier 1€, 10€,100€, 1000€Divisible by 2Divisible by 9Not divisibleby 2 or 9re-add the trial balancecolumns and recomputethe account balances.Scan trial balance andsee if a balance is equalto HALF the errorIf a balancewas 12€and it waslisted as21€, a 9€ errorhas beenmade.Reversing theorderofnumbers iscalledtranspositionerrorScan theledger andjournaltocheck if anaccountbalance orpostingmatching theerror amounthas beenomittedfromthe trialbalance