Closing
Entries
Transaction
Journal
Entry
Financial Statements
Adjusting
Entries
Ledger
Trial Balance
 The ledger is a group of all of the business’ accounts
 The group of them together is known as the ledger
 May be a binder or kept on the computer
 In the past few weeks....you were introduced to them
in T-Form
 But Remember..... I’m tricky
 In reality....
 The Ledger is organized in much the same fashion as the
journal
 Rather than use the LS and the RS of a T-Account,
accountants will post transactions to the debit or credit
side of the ledger journal paper
 Referred to as the Balance Column form
 The Owner had $500 cash beginning on March 1st
 The Owner then bought a microphone for $100
 Used to be....
Cash
Opening
500
Balance
 Becomes.....
100
March 19
This is the
Page # of the
General
Journal
This is your running
balance. You update
this after every entry
General Ledger
K. Dub Lip Singing
Chart of Account # 101
Account: Cash
Date
1
2
3
Mar
1
19
Particulars
Opening
Entry
P.R.
Debit
J1
500
Credit
DR/CR
Dr
Balance
500
1
Bought
Microphone
J1
100
Dr
400
2
3
 Items of Note
 Each account has a separate page/section in the ledger
 For each transaction that happens in the business, we
record it in the journal
 THEN Post the total to the ledger
 The ledger will keep a running total of each account
The numbers are
used for
identification.
 Since we are going to be “Posting”, we need to reference
all of our accounts.
 Assets




100-199
Liabilities
200-299
Capital (including Drawings) 300-399
Revenues
400-499
Expenses
500-599
 Assets
100-199
 Liabilities
200-299
 Capital
300-399
 Revenues
400-499
In order of Liquidity and
then Longevity (useful life)
In order of Maturity
Will be only 1 account +
drawings
List Core revenues 1st
 Expenses
500-599
Alphabetical order
 Example
 The owner, K. Dub invests $500 into the business on
March 18th
General Journal
K. Dub Lip Singing
Page 1
Date
1
2
3
Mar
18
Particulars
Cash
Capital, K.
Dub
Opening Balance.
Lip Singing
Company
P.R.
Debit
Credit
500
1
500
2
3
 Posting is the process of transferring the information
from the accountant’s general journal to the ledger of
accounts
 WHY DO WE BOTHER DOING THIS?
 CROSS REFERENCE
 Allows the accountant to double check to errors in
balances over the fiscal period
 Another name for this is an audit
 Systematic check of accounting records and procedures
 The accountant will make sure to include
 The Journal Page # when posting to the ledger
 The ledger account # when posting from the journal
Notice we’re on
Page 1. You’ll
need this info
later!
General Journal
This stands for Posting
Reference. It is to show
you which Chart of
Account # match up with
K. Dub Lip Singing
Page 1
Date
1
2
3
Mar
18
Particulars
Cash
101
Capital, K.
301
Dub
Opening Balance.
Lip Singing
Company
P.R.
Debit
Credit
500
1
500
2
3
 The process of performing Opening Entries to show
what the business first has in each account
 Example
Cash
$4000
Equipment
$5000
Truck
$20000
Accounts Payable
$3000
Capital
?
 The Opening Entries must first be recorded in our
journal
General Journal
P Money Accounting
Page 1
Date
Particulars
P.R.
Debit
Credit
1
1
2
2
3
3
 Next you must transfer those total into separate
accounts in the ledger
 Be sure to include
 The name of the account
 The Account #
 The Opening Date
 The Description “Opening Entry”
 Journal Page Reference
Forwarding is the process of continuing
an account on the next page by
carrying forward all relevant
information
If you were
“Forwarding” , you
would type that
here.
General Ledger
P. Money Accounting
Account: P. Lovett, Capital
Date
1
2
Particulars
Mar 18 Opening Bal.
500
Account #: 301
P.R.
J1
Debit
Credit
500
DR/CR
Balance
Cr
1
2
 Example:
 K. Efsee began his own restaurant. He had $17,000 in
cash; $6,000 in equipment, a Bank Loan of $15,000 and
overall capital of _______.
 Over the first month of operation the following 3
transactions happened
1.
2.
3.
He deposited $5,000 into the business
Sales of $450 were made
He paid off $1000 of the bank loan
 Step 1:
 Opening the Accounts
 Opening Journal Transactions and Opening Balances in the
Ledger
 Step 2:
 Performing Transactions in the journal
 Step 3:
 Posting the transactions to the ledger accounts
General Journal
K Efsee’s Fish
Page 1
Date
Particulars
P.R.
Debit
Credit
1
1
2
2
3
3
General Ledger
K. Efsee’s Fish
Account: Cash
Date
Account #: ???
Particulars
P.R.
Debit
Credit
DR/CR
Balance
1
1
2
2
3
3
General Ledger
K. Efsee’s Fish
Account: Equipment
Date
Particulars
Account #: ???
P.R.
Debit
Credit
DR/CR
Balance
1
1
2
2
3
3
General Ledger
K. Efsee’s Fish
Account: Bank Loan
Date
Particulars
Account #: ????
P.R.
Debit
Credit
DR/CR
Balance
1
1
2
2
3
3
General Ledger
K. Efsee’s Fish
Account: K. Efsee, Capital
Date
Particulars
Account #: ???
P.R.
Debit
Credit
DR/CR
Balance
1
1
2
2
3
3
General Ledger
K. Efsee’s Fish
Account: Revenue
Date
Account #: ???
Particulars
P.R.
Debit
Credit
DR/CR
Balance
1
1
2
2
3
3
General Journal
K Efsee’s Fish
Page 1
Date
Particulars
P.R.
Debit
Credit
1
1
2
2
3
3
 Page 132 #4 & #5