1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-1 Preparing a Chart of Accounts

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Read and define the following terms: Read pgs. 90-94. As you read, stop and define the following terms: ledger general ledger account number file maintenance opening an account 2 LESSON 4-1

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 4-1 TERMS REVIEW ledger – a group of accounts general ledger – a ledger that contains all accounts needed to prepare financial statements account number – the number assigned to a specific account file maintenance – the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current opening an account – creating a new account by choosing an account number and title page 95

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 4-1 ACCOUNT FORM A journal is a permanent record of the debit and credit parts of each transaction in chronological order However, journals do not show all the changes in a single account in one place If only using a journal, business must search through all journal pages to find transactions Therefore, a separate form is used for each account page 95

5. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 5 LESSON 4-1 ACCOUNT FORM An account form is based on and includes the debit and credits Also includes date and journal page number (post ref) Helps trace entries back to journal Up-to-date balance must be calculated each time account is used Balance-ruled account form is used as a permanent record of changes to account balances page 95

6. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 6 LESSON 4-1 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns

7. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON 4-1 CHART OF ACCOUNTS page 92 Accounts in a general ledger are arranged in the same order as they appear on financial statements: Balance Sheet: Assets, Liabilities, Owner’s Equity Income Statement: Revenue, Expenses

8. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 4-1 CHART OF ACCOUNTS page 92

9. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 9 LESSON 4-1 CHART OF ACCOUNTS page 92 A 3 digit number is assigned to each account First digit shows the general ledger division Second & third digits indicate the location of each account within a general ledger division Companies initially assign account numbers by 10s so that new accounts can be added easily (pg. 92-93) Expense accounts are arranged in alphabetical order

10. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON 4-1 ACCOUNT NUMBERS page 92

11. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 4-1 1.Write the account title after the word Account in the heading. 2.Write the account number after the words Account No. in the heading. OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 12

12. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 4-1 OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 To open an account - write an account title and number on the general ledger (pg.94) A general ledger account is opened for each account listed on a chart of accounts Accounts are opened and arranged in a general ledger in the same order as on the chart of accounts

13. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 4-1 Assignment page 94 Complete 4-1 Work Together and On Your Own