LESSON 4-1
Preparing a
Chart of Accounts
ACCOUNTING IN THE REAL WORLD &
INTERNET ACTIVITY
What’s
My Balance?
Record Sales Volume at
Amazon.com
 Answer the two critical
thinking questions.
 Internet
Activity
www.sec.gov
AMAZON.COM


Might have thought that customers would
appreciate these two features and that the
benefits of these might outweigh the “slightly
reduced sales”
Amazon might not be able to process all the
orders in a timely manner. The suppliers could
run out of some of the products, increasing the
number of late shipments. In extreme situations,
the web site might not be able to handle the high
volume of sales, and some customers might not
come back to try again.
SEC
Securities Act of 1933
 Securities Exchange Act of 1934


Two acts that created the SEC
What are the purposes of
these two acts????
PREVIOUSLY….
Define Accounting terms related to posting from
a journal to a general ledger.
 Identify accounting concepts and practices
related to posting from a journal to a general
ledger
 Prepare a chart of accounts for a service business
organized as a proprietorship

REMEMBER!
Each account title used for recording entries in a
journal also represents an account in a group of
accounts.
 The group of accounts is not in random order.
There is a standard way of organizing this group
of accounts.

RELATIONSHIP OF A T ACCOUNT
TO AN ACCOUNT FORM
page 91
7
•The general ledger account form also contains the T
previously shown in the accounting equation, balance
sheet, and T account.
•The benefit of using the balance-ruled account form is
that an up to date account balance is always available.
Balance columns
LESSON 4-1
CHART OF ACCOUNTS
8
•A group of accounts is called a
ledger.
•A ledger that contains all
accounts needed to prepare
financial statements is called a
general ledger.
•The number assigned to an
account is called an account
number
LESSON
4-1
ACCOUNT NUMBERS
The first digit of each account number shows the general ledger
division in which the account is located.
The second two digits indicate the location of each
account within a general ledger division. The 50 in
the account number for Supplies indicates that the
account is located between account number 140 and
160. (Sequence of 10s)
9
Example-the asset division accounts are numbered in the100s.
Therefore, the number for the asset account, Supplies begins
with a 1.
LESSON
4-1
REMEMBER….
Expenses are listed in Alphabetical
Order
Assets are listed by the order of
their liquidity.
OPENING AN ACCOUNT
IN A GENERAL LEDGER
page 94
1. Write the account title.
LESSON
2. Write the account number.
1
REMEMBER: The general ledger accounts must be opened before they
can be used.
2
11
1
4-
ALSO…
•Each account is kept on a separate
card
•Ledger cards are kept in chart of
accounts number order.
•A new card can be inserted for a
new account
LESSON 4-2
Posting Separate Amounts
from a Journal to a
General Ledger
ACCOUNTING IN THE REAL WORLD &
INTERNET ACTIVITY
What’s
My Balance?
Record Sales Volume at
Amazon.com
 Answer the two critical
thinking questions.
 Internet
Activity
www.sec.gov
TERMS REVIEW
Ledger-A group of accounts
 general ledger-an ledger that contains all
accounts needed to prepare financial statements
 account number-The number assigned to an
account
 file maintenance-the procedure for arranging
accounts in a general ledger, assigning account
numbers, and keeping records current
 opening an account-Writing an account title
and number on the heading of an account

LESSON 4-1
TODAY…



Post separate amounts from a journal to a
general ledger.
Posting-transferring information from a journal
entry to a ledger
In this lesson, we will now transfer the
information from the journal entries, recorded in
Chapter 3, to the general ledger accounts we just
opened. This process is called Posting.
POSTING AN AMOUNT
FROM A GENERAL DEBIT COLUMN
page 96
17
1
5
3
2
4
1. Write the date.
2. Write the journal page number.
3. Write the debit amount.
4. Write the new account balance.
5. Return to the journal and write
the account number.
LESSON
4-2
POSTING A SECOND AMOUNT
TO AN ACCOUNT
page 97
18
1
5
3
2
4
1. Write the date.
2. Write the journal page number.
3. Write the debit amount.
4. Write the new account balance.
5. Return to the journal and write
the account number.
LESSON
4-2
POSTING AN AMOUNT
FROM A GENERAL CREDIT COLUMN
page 98
19
5
1
3
2
4
1. Write the date.
2. Write the journal page number.
3. Write the credit amount.
4. Write the new account balance.
5. Return to the journal and write
the account number.
LESSON
4-2
20
TERM REVIEW

page 99
Posting-transferring information from a journal
entry to a ledger account. (p. 96)
LESSON 4-2
APLIA
Work Together 4-2
 Own your Own 4-2
 Application Problem 4-2

EXIT TICKET
List the five steps of posting from the general
columns of a journal to the general ledger?
 Are the totals of the General Debit and General
Credit columns posted? Why or why not?
Answers: 1. Write the date

2.Write the journal page number.
3.Write the debit amount.
4.Write the new account balance
5.Return to the journal and write the account number
No. Each separate amount in the General Debit and
General Credit columns of a journal is posted to the
account written in the Account Title column.
BELL RINGER
Take this time to finish up the “What’s My
Balance Scenario”
 Work on Drill #4 Handout. This should be a
review of the pervious two classes
 Turn in to Mr. K when done.

LESSON 4-3
Posting Column Totals
from a Journal to a
General Ledger
OBJECTIVES FOR TODAY….

This lesson is about posting journal column
totals.

Why are journal columns totaled?

To prove equality of debits and credits.
In this lesson, we
will post the totals
of the special
amount columns.
LET ME EXPLAIN…
The totals brought forward from the pervious
page of a journal are not posted individually.
 Remember that separate amounts in the special
amount columns are not posted individually.
 Post Reference Columns

An entry in the account can be traced to:
Its source in the journal
 Where it was posted into the account
 OR if posting was interrupted, the accounting personnel can
easily see which entries in the journal still need to be
posted.


A check mark in the Post Ref column means that
nothing on that line is posted individually.
CHECK MARKS SHOW THAT
AMOUNTS ARE NOT POSTED
page 100
27
Check mark indicates that
amounts ARE NOT posted
individually.
Check mark indicates that
general amount column
totals ARE NOT posted.
LES
SON
4-3
POSTING THE TOTAL
OF THE SALES CREDIT COLUMN
The type of journal amount column an amount is recorded in
determines how that amount is posted to the general ledger.
The amounts in the special amount columns are posted as
part of the total of the amount column
Posting totals saves time and reduces errors because only
the total of many of the same kinds of transactions must be
posted, as opposed to posting each amount each time a
frequently occurring transaction is journalized.
Here are the five steps for posting the total of the sales
credit column.
POSTING THE TOTAL
OF THE SALES CREDIT COLUMN
page 101
29
3
1
5
2
4
1. Write the date.
2. Write the journal page number.
3. Write the column total.
4. Write the new account balance.
5. Return to the journal and writeLES
SON
the account number.
4-3
POSTING THE TOTAL
OF THE CASH DEBIT COLUMN
page 102
30
1
3
5
2
4
1. Write the date.
2. Write the journal page number.
3. Write the column total.
4. Write the new account balance.
5. Return to the journal and writeLES
SON
the account number.
4-3
POSTING THE TOTAL
OF THE CASH CREDIT COLUMN
page 103
3
31
1
5
2
4
1. Write the date.
2. Write the journal page number.
3. Write the column total.
4. Write the new account balance.
5. Return to the journal and writeLES
SON
the account number.
4-3
REMEMBER
Whenever the debits in an account exceed the credits, the
account balance is a debit.
Whenever the credits in an account exceed the debits, the
account balance is a credit.
APLIA-4-3
4-3 WORK TOGETHER AND ON YOUR OWN
4-3 APPLICATION PROBLEM
LESSON 4-4
Completed Accounting Forms and Making
Correcting Entries
REMINDER!!!!


WHEN MANUAL JOURNAL ENTRIES ARE
MADE, THEY ARE USUALLY ENTERED IN
INK SO THAT THE RECORDS ARE MORE
PERMANENT.
THE FOUR STEP PROCESS WILL AGAIN BE
FOLLOWED TO RECORD TRANSACTIONS IN
THE JOURNAL.
JOURNAL PAGE
WITH POSTING COMPLETED
page 105
36
With the exception of the Totals line, notice that the Post Ref. Column is
completely filled in with either an account number or a check mark.
EXPLANATION

Examine the ledger accounts illustrated on this
page (106-107)
Notice that in the Supplies account, three entries are
from the first page of the journal and one is from the
second page.
 Notice that in the Accounts Payable-Supply Depot,
the debit entry on August 11 reduced the credit
balance of the account.

QUESTION…

Does the one entry in the Sales account mean
that only one sale was made all month?

Answer: No, it is the posting of the Sales Credit
Column total, which includes may sales during the
month.
QUESTION #2…


How can you tell whether this is a new company
or not?
Answer: There was no previous balance in the
owner’s capital account, so it is a new company.
QUESTION #3 & # 4…




How can you tell whether any of the entries on
this page are the posting of column totals?
Answer: You cannot tell just from the posting
entries but the credit to sales in a column total.
Why are there no special amount columns in the
journal for any of the expense accounts?
Answer: Because the accounts do not have
frequent entries during the month.
MEMORANDUM
FOR A CORRECTING ENTRY
page 108
41
A correcting entry is
made to correct an error
in the ledger. The error
is not merely crossed out.
A Memorandum is used
as the source document
for a correcting entry.
A correcting entry requires that the error first be analyzed to
determine what accounts need to be debited and credited to correct the
error. Once this analysis is done, an entry can be recorded in a
journal.
LES
SON
4-4
JOURNAL ENTRY
TO RECORD A CORRECTING ENTRY
1
Date
42
November 13. Discovered that a payment
of cash for advertising in October was
journalized and posted in error as a
debit to Miscellaneous Expense instead
of Advertising Expense, $140.00.
Memorandum No. 15.
page 108
Debit
2
4
Source Document
Credit
3
LES
SON
4-4
APLIA
•WORK TOGETHER 4-4
•OWN YOUR OWN 4-4
•WA NT A CHALLENGE?
*Try the mastery
problem
EXPLORE ACCOUNTING
DEVELOP A CHART OF ACCOUNTS
FOR AN IMAGINARY BUSINESS.
WRITE A DETAILED DESCRIPTION OF
THE COMPANY AND A RATIONAL FOR
THE ACCOUNT NUMBERING SYSTEM
YOU HAVE DEVELOPED.