Introduction to Accounting 120
Chapter 6:
The Journal and Source
Documents
Mr. Binet
Moncton High
School
Chapter Highlights
• The Journal
• Source Documents
• Provincial Sales Tax
• The Goods and Services
Tax
• Analyzing Financial Data:
Trend Analysis
The Journal
• In the past two chapters we
have recorded changes
caused by transactions, the
ledger accounts called TAccounts.
• These ledger accounts
alone do not satisfy all of
The Journal
• Each transaction required two
or more entries that must
balance.
• Transactions mount up and
become scattered within the
ledger.
• It may become difficult to put
The Journal
• Entries are recorded in a
journal before they are
recorded in the ledger.
• Each transaction is
recorded in the order of
their occurrence.
Two-Column General Journal
• The accounting entries for the
transactions are referred to as
journal entries.
• An entry is made up of all the
accounting changes from one
transaction, in the form in
which they are written up in
the general journal.
Journalizing
• This is the process of
recording accounting entries
in the journal.
• The journal is known as a
book of original entry
because each balanced
accounting entry is recorded
Journalizing
1.
Transactio
ns
Occur
2.
Transactio
ns are
recorded in
3. The
accounting
entries are
transferred to
the ledger
accounts
Journalizing in the Two-Column
General Ledger
• From Page 169:
• 1. The year: Enter the year in small figures
on the first line of each page. Do not repeat
it for each entry. Enter a new year at the
point on the page where it occurs.
• 2. The month: Enter the month on the first
line of each page. Do not repeat it for each
entry. Enter a new month at the point where
it occurs.
• 3. The day: Enter the day on the first line of
each journal entry. The day is repeated no
Steps in Recording a Journal
Entry
• Step 1: Enter the day in the date column
• Step 2: Enter the names of the accounts to
be debited at the left side of the Particulars
column. Enter the debit amounts in the
Debit money column.
• Step 3: Enter the names of the accounts to
be credited. They are intended 3 spaces in
the Particulars column. Enter the credit
amounts in the Credit money column.
• Step 4: Write a brief explanation for the
entry at the left side of the Particulars
Usefulness of the General
Journal
• The purpose of the genera journal is to
provide a continuous record of the
accounting entries in the order in which
they occur.
• The accounting clerk works out the
accounting works out the accounting
entries from the source documents and
records them in the journal.
• The clerk can then see the work in an
organized way.
• A job well done at this stage reduces errors
6.2 Source Documents
Mr. Binet
Moncton High
School
Source Documents
• The accounting department is informed of
transactions by means of business papers
that are sent to it. These papers are called
source documents.
• This is a business paper that shows the
nature of a transaction and provides all of
the info needed to account for it properly.
• Almost all accounting entries are based on
source documents.
Source Documents
• For some transactions, such as the owner
drawing money from the company, there is
no official formal document.
• For this, they must issue a memo from the
owner.
• A company is required to keep source
documents on file.
• They are used for reference, locating errors
and provide factual evidence to verify
transactions of the business.
• Provides proof that the records have been
Source Document Types
• Cash Sales Slip: is a business form
showing the details of a transaction for
goods or services that are sold to a
customer for cash.
• Sales Invoice: Some business do not have
cash sales and all sales are on account. A
sales invoice is a business form showing
the details of the transaction in which
goods or services are sold on account.
• Dual Purposes Sales Slip: is a business
form showing the details of a transaction in
which goods or services are sold either for
Source Document Types
• Purchase Invoice: Is a business form
representing a purchase of goods or
services on account.
• Cheque Copies: Is a document supporting
the accounting entry for a payment by
cheque.
• Cash Receipts Daily Summary: Is a
business paper that lists the money coming
in from customers.
• Bank Debit/Credit Advice: is a bank
document informing the business of an
GAAP: The Cost Principle
• The cost principle states
that the accounting for
purchases must be at the
cost of price to the
purchaser.
Chapter 6 – Assignment #1
• On the O: drive, open the
“Chapter 6 – Assignment
#1” Document and Excel file
and complete.
• This will be due Wednesday
in Class.