Chapter 5 Journalizing
Transactions
 Definitions:
– Journal-A form for recording transactions in
chronological order.(A book of original entry)
– Journalizing-Recording transactions in a
journal.
– Special Amount Columns-A journal amount
column headed with an account title.
Definitions Continued
– General Amount Column-A journal amount
column that is not headed with an account title.
– Entry-Information for each transaction recorded
in a journal.
– Double-Entry Accounting-The recording of
debit and credit parts of a transaction.
– Source Document-A business paper from which
information is obtained for a journal entry.
Definitions Continued
– Check-A business form ordering a bank to pay
cash from a bank account.
– Receipt-A business form giving written
acknowledgment for cash received.
– Memorandum-A form on which a brief
message is written describing a transaction.
– Proving Cash-Determining that the amount of
cash agrees with the accounting records.
Chapter Highlights
 Four parts of an entry
– Date
– Debit
– Credit
– Source Document
– Before a transaction is
recorded in a journal, it
must be analyzed into
its debit and credit
parts.
 The terms Debit and
Credit are abbreviated
at dr and cr. These are
derived from Latin
and Italian words
debere and credere.
Ledgers with debit and
credit sides became
popular in the 17th
century in Europe
Proving a Journal Page
 Proving is showing
that total debits = total
credits.
 Proving has 3 steps
– 1.Add each of the
amount columns.
– 2.Add the debit column
totals, and then ad the
credit column totals.
– 3.Verify that debits =
credits
Ruling
 Rule a single line
across all amount
columns directly
below the last entry to
indicate that the
columns are to be
added.
 On the next line write
the date in the date
column.
 Write words carried
forward if bringing
totals to the top of the
next page if final totals
enter the word
“totals”.
Also place a check
mark in the post
reference column(PR)
Rulings Continued
 On the top of the new
page if not final totals
write Brought Forward
in the Account Title
Column and place a
check mark in the PR
column.
 Write each column
total below the single
ruled line.
 Rule double lines
blow the column totals
across all amount
columns. The double
lines mean that the
totals have been
verified.
Prove Cash
 1-Cash Balance on
 3-Subtract cash paid
hand at beginning of
fiscal period
 2Add the cash
received during the
fiscal period(This is
usually the cash debit
total)
out during the fiscal
period(Usually the
cash credit total)
 4-Equal the cash on
hand at the end of the
fiscal period.
 5-Verify that the cash
balance = the
checkbook balance.
General Accounting Practices
 Errors are corrected in a way that does not
cause doubts about whether the information
is correct. Draw a neat line through an error
and write the correction above the cancelled
item.
 Words in accounting record are written in
full when space permits. All items need to
be legible. Only abbreviate when space is
limited.
Practices Continued
 Dollars and cents signs and decimal points
are not used when writing amount on ruled
account paper.
 Two zeros are written in the cents column
when an amount is in even dollars otherwise
doubts may arise as to amounts.
Practices Continued
 A single ruled line indicates addition or
subtraction.
 A double ruled line indicates totals are
verified and correct.
 Neatness is important and rulers should be
used to make rulings.