0 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Posting Journal Entries to General Ledger Accounts What You’ll Learn  Describe the steps in the posting process.  Post general journal entries.  The steps involved in the preparation of a trial balance.  How to find and correct errors in a trial balance.  Record correcting entries in the general journal.  Define the accounting terms introduced in this chapter.

1 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7, Section 1 The General Ledger What Do You Think? Why do you think an accounting system uses a general ledger?

2 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Main Idea The general ledger is a permanent record organized by account number. You Will Learn  how to set up the general ledger.  how managers use journals and ledgers. The General Ledger SECTION 7.1

3 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Key Terms  posting  general ledger  ledger account forms The General Ledger SECTION 7.1

4 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Setting Up the General Ledger Accounts used by a business are kept on separate pages or cards in a book or file called a ledger. It is important for a number of reasons:  This creates a record of the impact of business transactions on each account used by a business.  Helps managers easily find the current balance of a specific account. The General Ledger SECTION 7.1

5 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Setting Up the General Ledger Posting is the process of transferring information from the journal to individual ledger accounts. It is the process by which random transactions become organized in a manner according to accounts. The General Ledger SECTION 7.1

6 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Setting Up the General Ledger All transactions must be moved to a permanent record organized by account number called a general ledger. This information is continually used by managers. It provides up-to-date balances for each account, including accounts payable and receivable:  In a computerized system, electronic files are still referred to as a ledger, or the ledger accounts.  Managers use ledgers to obtain summarized information. The General Ledger SECTION 7.1

7 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. The Fourth Step in the Accounting Cycle: Posting Information in a journal entry is posted to the general ledger to provide a clear picture of how a business transaction changes an account’s balance. The General Ledger SECTION 7.1

8 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. The Four-Column Ledger Account Form In a manual accounting system, information about specific accounts is recorded in ledger account forms:  The forms are defined by the number of columns into which a dollar amount goes.  Debit and credit amounts are posted from journal entries to the first two amount columns.  The new account balance is entered in one of the last two amount columns.  The type of account determines which balance column to use. The General Ledger SECTION 7.1

9 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. The Four-Column Ledger Account Form The four-column ledger account form has spaces to enter the account name, the account number, the date, a description of the entry, and the posting reference. The General Ledger SECTION 7.1

10 Glencoe Accounting Unit 2 Chapter 7 Copyright © by The McGraw-Hill Companies, Inc. All rights reserved. Key Terms  posting The process of transferring information from the journal to individual general ledger accounts.  general ledger A permanent record organized by account number.  ledger account form The accounting stationery used to record financial information about specific accounts. The General Ledger SECTION 7.1