The Accounting Cycle The General Journal

The accounting cycle Up to this point the accounting cycle for us has been very limited: Analyze transactions using T – Accounts Prepare Trial Balance Create Financial Statements In this unit we will be completing the entire accounting cycle for a service business, so that you can truly say you could “Do the Books” for any service company!

Imagine a company that has 300 ledger accounts… You have an amount in your cash account for $300 but cannot seem to be able to figure out where the accompanying credit was applied to…. What could you do? Hopefully you recorded the transaction #, but this could still take a long time to search for! We could start recording transactions with the debits and credits together……

Presenting the……. General journal The fix for all our problems!

Making Journal Entries Enter the page number. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the date Making Journal Entries Enter the date. The month and year goes in the first date column. The day of the month goes in the second date column. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the debit account(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the debit amount(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the credit account(s) Making Journal Entries Enter the credit account(s). Be sure to indent the account name. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the credit amount(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Write a short description of the transaction Making Journal Entries Write a short description of the transaction. Include the source document number if available. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Skip a line and start the next transaction Making Journal Entries Skip a line and start the next transaction. If the transaction occurs in the same month as the previous one, you do not need to re-write the month and year. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the debit account(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the debit amount(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the credit account(s) Making Journal Entries Enter the credit account(s). Be sure to indent the account name. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Enter the credit amount(s). Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries In this transaction, there are two credit entries. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries The amounts of the two credit entries equal the debit entry amount. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Making Journal Entries Write a short description of the transaction Making Journal Entries Write a short description of the transaction. Include the source document number if available. You may use more than one line to write the explanation if necessary. Chapter 6 – The Journal and Source Documents l Accounting 1, 7th Edition

Homework We are simply now going to “journalize” transactions that we have become used to up to this point Page 115 # 1-3