1. Chapter 7: Posting Journal Entries to General Ledger Accounts Section 1: The General Ledger

2. Chapter Objectives  Describe the steps in the posting process  Post general journal entries  Prepare a trial balance  Locate and correct trial balance errors  Record correcting entries in the general journal  Define the accounting terms introduced in this chapter

3. Section 1:The General Ledger  What you will learn?  The purpose of the general ledger  How to open accounts in the general ledger  Why it’s important?  You examine the ledger to review how business transactions affect each account.

4. General ledger—step 4

5. Setting up a General Ledger  In a manual system—accounts used by a business are kept on a separate page  Kept in a book or file called a ledger  Called the general ledger  Creates a record of the impact of business transactions on each account used by a business  after transactions have been posted—easily see the current balance of each account

6. The 4 Column Ledger Account Form 1. Date 2. Account Name 3. Debit/credit transaction—from the general journal 4. Balance—current balance The type of account determines which balance column to use

7. Opening accounts in the ledger  With a zero balance:  1. Write the account name at the top of the ledger account form  2. Write the account number on the ledger form  These two steps are performed each time a new ledger account page is needed 1 1 2 2

8. Opening Accounts in the ledger  Opening an account with a balance:  1. Write the account name at the top of the ledger account form  2. Write the account number on the ledger account form.

9. Opening Accounts in the ledger  Opening an account with a balance  3. Enter the complete date (year, month and day) in the date column  4. Write the world “balance” in the description column

10. Opening Accounts in the ledger  Opening an account with a balance  5. Place a check mark in the posting reference column to show the amount entered on this line is not being posted from a journal  6. Enter the balance in the appropriate balance column of the ledger account form.

11. Importance of Journals & Ledgers  Allows managers, owners, accountants to summarize account information before the financial statements are prepared.  Up-to-date information about each individual account

12. Thinking Critically  List the steps involved in opening an account with a zero balance.  List the steps involved in opening an account with a balance.