Introduction to Accounting 120 Chapter 4 The General Journal Thursday, April 21 st

In Today’s Class Reminder: All outstand assignments are now overdue. Check Engrade.ca for you Mid- term 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 process 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 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 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 The Journal Entry Examine the following partial journal page:

Entries to the Two-Column Journal- Year 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 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 Journal- Particulars 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 Journal- Particulars 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 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 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 sheet is created.

The Opening Entry 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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