Chapter 4-1
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 it is always an up to
date account balance.
Chart of Accounts
Assign account numbers by 10’s
The account numbering system is determined by the size and nature of the
business
New accounts are listed between two existing accounts are assigned the
middle, unused account number between the numbers of the existing
accounts.
A new account listed at the end of a section is assigned the next number in the
sequence of 10’s.
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 name given to an account is known as an account title.
The number assigned to an account is called an account number.
Expenses are listed in alphabetical order
Assets are listed by order of liquidity
Writing an account title and number on the heading of an account is called
opening an account.
A general ledger account is opened afor each account listed on a chart of
accounts.
Accounts are opened and arranged in a general ledger in the same order as
on the chart of accounts.
General ledger accounts must be opened before they can be used.
2 steps to open an account: Write the account title and write the account
number.
Each account is kept on a separate card.
Ledger cards are kept in chart of accounts number order.
A new card can easily be inserted for a new account.
4-2 Posting Separate Amounts from a Journal to a General Ledger
Transferring information from a journal entry to a ledger account is called
posting. Posting sorts journal entries so that all debits and credits affecting each
account are brought together.
Amounts in general amount columns are posted individually
Amounts in special amount columns are posted as part of the total for the
amount column.
There are two rules for posting amounts from a journal: 1. Separate amounts in
a journals general amount columns are posted individually to the account
written in the Account Title column. 2. Separate amounts in a journals special
amount columns are not posted individually.
The numbers in the Post. Ref columns of the general ledger account and the
journal serve three purposes: 1. An entry in an account can be traced to its
source in a journal. 2. An entry in a journal can be traced to where it was
posted in an account. 3. If posting is interrupted, the accounting personnnel
can easily see which entries in the journal still need to be posted. A blank in the
Post. Ref column of the journal indicates that posting for that line still needs to be
completed.
Steps for Posting an amount from a general debit column
1.
2.
3.
4.
5.
Steps for posting a second amount to an account
1.
2.
3.
4.
5.
Steps for posting an amount from a general credit column
1.
2.
3.
4.
5.
Amounts in general amount columns are posted individually.
4-3 Posting Column Totals from a Journal to a General Ledger
Steps for posting the total of the sales credit column
1.
2.
3.
4.
5.
Steps for posting to the total of the cash debit column
1.
2.
3.
4.
5.
Steps for posting to the total of the cash credit column
1.
2.
3.
4.
5.
Totals brough forward from the previous page of a journal are not posted
individually.
Separate amounts in the special amount columns are not posted individually.
Only totals are posted for: Sales Credit, Cash Debit, Cash Credit
4-4 Completed Accounting Forms and Making Correcting Entries
The second illustration on page 105-107 shows all the general ledger accounts
and the entries posted to them.
Check marks are under the regular column totals account numbers are under
the 3 special amount columns.
In some instances a transaction may have been improperly journalized and
posted to the ledger. In such a case, the incorrect journal entry should be
corrected with an additional journal entry called a correcting entry. If an
accounting error is discovered a memorandum is prepared as the source
document describing the correction to be made.