Introduction to Accounting 120
Chapter 4
The General Journal
Thursday, April 21st
In Today’s Class
• Reminder: All outstand
assignments are now overdue.
• Check Engrade.ca for you Midterm MC marks and to see any
assignments you’re missing.
• Moving on: The Trial Balance
The General Journal
• Thus far, transactions have been
analyzed using an equation analysis
sheet and a transaction analysis sheet.
Exposure to these documents enhances
student understanding of the
fundamental accounting equation and
debit/credit theory. These documents are
not well suited for regular accounting
purposes, nor do they serve the
accounting need to systematically
The General Journal
•
Accountants use another book, namely a general
journal or simply journal, to keep all entries
together. Transactions are recorded separately, in
order by date (chronological order), and are
periodically transferred from the general journal to
the general ledger. Because the journal is where
the accounting process begins, it is known as the
book of original entry. The journal provides an
important, continuous record of all transactions.
The General Journal
•
Accountants use another book, namely a general journal or simply journal, to keep all entries
together. Transactions are recorded separately, in order by date (chronological order), and are
periodically transferred from the general journal to the general ledger. Because the journal is where the
accounting process begins, it is known as the book of original entry. The journal provides an
important, continuous record of all transactions.
The Journal Entry
• General journal accounting entries are
referred to as journal entries. A journal
entry is all of the accounting changes
resulting from one transaction. Journal
entries are recorded on a two-column
journal in a particular manner.
The Journal Entry
•
Examine the following partial journal page:
Entries to the Two-Column JournalYear
•
The year is entered only once per page beneath
the word Date. Do not repeat it for each entry.
Entries to the Two-Column Journal-Month &
Day
•
•
The month is entered on the first line of each page. Do not repeat it for
each entry. Enter a new month at the point where it occurs.
The day is entered on the first line of each journal entry. The day is
repeated for every transaction.
Entries to the Two-Column JournalParticulars
•
•
•
•
•
Particulars display the accounts affected and an
explanation of the transaction.
Note the following:
Debit accounts are listed first and are aligned at the left
margin of the column.
Credit accounts are indented (three spaces) from the left
margin of the column.
A brief explanation is aligned at the left margin of the
column. When possible, it includes reference information
from the originating source document. This concept will be
explored further. An explanation should not exceed two
lines.
Entries to the Two-Column JournalParticulars
• Each transaction is single-spaced with a
double-space between entries.
Entries to the Two-Column Journal-Page
Number
• Each page is numbered consecutively.
Usefulness of the General
Journal
• Let's review the benefits of the journal.
• It provides an orderly recording of all entries.
• It allows the accountant to easily verify that
each transaction is balanced.
• It allows for efficient error detection.
The Opening Entry
•
•
The very first journal entry a company makes
establishes the business.
Let's review how a business is theoretically
formed. The owner purchases necessary assets
but does not generally finance all of these initial
costs. The owner may "donate" some assets to the
business but most likely will also obtain a bank
loan and purchase some items on credit. The
fundamental accounting equation is now used to
determine the net worth of the company/owner,
and with this information, the first official balance
The Opening Entry
• This balance sheet is the source document
used to prepare the company's first journal
entry.
• The figures for this accounting entry came
from the company's first balance sheet.
The Opening Entry (Continued)
•
•
•
•
Note the following:
Being that this is the very first journal entry, the page number is 1.
All originating assets and liabilities are listed.
An opening entry only occurs once for a company.
The Opening Entry (Continued)
• The opening entry is a compound entry. A
compound entry is any that involves more
than two debit accounts and/or more than
two credit accounts.
The Opening Entry (Continued)
• The opening entry is a compound entry. A
compound entry is any that involves more
than two debit accounts and/or more than
two credit accounts.
Final Unit 4 Assignment!!! #5
• This is a long one, folks.
• U4A5 is on the O:\Binet drive as well as the
website. It consists of U4A5.doc and
U4A5.xls
• This one is comprehensive, worth lots of
points and you should take your time and do
it correctly.
• Review past PowerPoint files and refer to
the textbook as well if you need help.
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Albums: Mass Romantic (2000), Electric Version (2003), Twin Cinema
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http://radio3.cbc.ca/bands/New-Pornographers
Band of the Day
• The New Pornographers
– “Your Hands Together”