1 Jurnal Transaksi Pertemuan 4 s.d 13 Matakuliah: F0632/Accounting Software Package Tahun: 2006

2 JURNAL ENTRY Journal entry is an entry to the journal. Journal is a record that keeps accounting transactions in chronological order, i.e. as they occur. Ledger is a record that keeps accounting transactions by accounts. Account is a unit to record and summarize accounting transactions. All accounting transactions are recorded through journal entries that show account names, amounts, and whether those accounts are recorded in debit or credit side of accounts.

3 DOUBLE ENTRY IN ACCOUNTING To record transactions, accounting system uses double-entry accounting. Double-entry implies that transactions are always recorded using two sides, debit and credit. Debit refers to the left-hand side and credit refers to the right-hand side of the journal entry or account. The sum of debit side amounts should equal to the sum of credit side amounts. A journal entry is called "balanced" when the sum of debit side amounts equals to the sum of credit side amounts.

4 T-ACCOUNT This form looks like a letter "T", so it is called a T-account. T- account is a convenient form to analyze accounts, because it shows both debit and credit sides of the account. Account DebitCredit

5 Debits and Credits of Accounts DebitCredit Increase in asset accountsDecrease in asset accounts Increase in expense accountsDecrease in expense accounts Decrease in liability accountsIncrease in liability accounts Decrease in equity accountsIncrease in equity accounts Decrease in revenue accountsIncrease in revenue accounts

6 Normal Balances of Accounts Accounts have normal balances on the side where the increases in such accounts are recorded. Asset accounts have normal balances on debit side. Expense accounts have normal balances on debit side. Liability accounts have normal balances on credit side. Equity accounts have normal balances on credit side. Revenue accounts have normal balances on credit side. On the financial statements, accounts are reported on the sides where they have normal balances. Liability accounts have normal balances on credit side. Equity accounts have normal balances on credit side.

7 Normal Balances of Accounts Balance Sheet AssetsLiabilities Owners’ Equity Income Statement ExpensesRevenues

8 ADJUSTING JURNAL ENTRY Adjusting journal entry is a journal entry prepared to adjust account balances. The only way of changing account balances is to make journal entries. Account balances cannot be changed without journal entries. If current account balances do not represent correct amounts, journal entries are needed to change current balances to the correct balances. --> Journal entries prepared with this purpose are adjusting journal entries.

9 ADJUSTING JURNAL ENTRY Companies need Adjusting Journal Entries because : Current account balances may not represent correct balances due to following reasons: Company made mistakes in preparing journal entries in the past. Accounting records are not updated to reflect new transactions or amount changes in previous transactions. Adjusting journal entries are usually prepared at the end of an accounting period to update account balances to reflect correct balances as of the balance sheet date (the date at the end of an accounting period). The timing differences in recognizing revenues and expenses between accrual basis and cash basis accounting are frequently corrected by adjusting journal entries.

10 JURNAL ENTRY Three steps of preparing adjusting journal entries : Step 1: Identify the original journal entries that have been made during the period. Step 2: Identify the correct account balances. Step 3: Analyze the differences between correct and current balances and prepare journal entries to adjust such differences.

11 INVENTORY SYSTEM PERPETUAL INVENTORY SYSTEM Perpetual inventory system updates inventory accounts after each purchase or sale. Inventory subsidiary ledger is updated after each transaction. Inventory quantities are updated continuously. PERIODIC INVENTORY SYSTEM Periodic inventory system records inventory purchase or sale in "Purchases" account. "Purchases" account is updated continuously, however, "Inventory" account is updated on a periodic basis, at the end of each accounting period (e.g., monthly, quarterly) Inventory subsidiary ledger is not updated after each purchase or sale of inventory. Inventory quantities are not updated continuously. Inventory quantities are updated on a periodic basis.