1. Recording Transactions in a General Journal
Chapter 6 $
Recording Transactions in a General Journal $ $ $

2. $ $ $ $ The Accounting Cycle Chapter 6
The accounting period of a business is separated into activities that help the business keep its accounting records in an orderly fashion.
These activities are called the accounting cycle. $ $

3. Chapter 6 $
The Steps of the Accounting Cycle $ $ $

4. $ $ $ $ Step #1: Collecting and Verifying Source Documents Chapter 6
The accounting cycle starts by collecting and verifying the accuracy of source documents.
Source documents: a paper prepared as evidence of a transaction. $ $

5. $ $ $ $ The First Step: Collecting and Verifying Source Documents
Chapter 6 $
The First Step: Collecting and Verifying Source Documents $
Invoice:
Lists specific
information
about a
business
transaction
involving the
buying or selling of an item. The invoice contains the date of the transaction, along with the quantity, description, and cost of each item. $ $

6. $ $ $ $ The First Step: Collecting and Verifying Source Documents
Chapter 6 $
The First Step: Collecting and Verifying Source Documents $
Receipt:
A record of
cash received
by a business.
It indicates the
date the
payment was
received, the
name of the person or business from whom the payment was received, and the amount of the payment. $ $

7. $ $ $ $ The First Step: Collecting and Verifying Source Documents
Chapter 6 $
The First Step: Collecting and Verifying Source Documents $
Memorandum:
A brief written
message that
describes a
transaction
that takes
place within a
business. Often
used if no other source document exists for the business transaction. $ $

8. Chapter 6 $
The First Step in the Accounting Cycle: Collecting and Verifying Source Documents $
Check Stub:
The check stub
lists the same
information that
appears on a
check: the date
written, the person
or business to
whom the check was written, and the amount of the check. The check stub also shows the balance in the checking account before and after each check is written. $ $

9. $ $ $ $ Step #2: Analyzing Business Transactions Chapter 6
Analyzing information on the source documents to determine the debit and credit parts of each transaction. $ $

10. $ $ $ $ Step 3: Recording Business Transactions in a Journal Chapter 6
Record the debit and credit parts of each business transaction in a journal.
A journal is a record of all of the transactions of a business.
The process of recording business transactions in a journal is called journalizing. $ $

11. $ $ $ $ The Accounting Period Chapter 6
Accounting records are summarized for a certain period of time, called an accounting period
Most businesses use a year, as their accounting period begins on January 1 and ends on December 31
The “calendar year”
The fiscal year is an accounting period of twelve months $ $ $

12. $ $ $ $ Recording a General Journal Entry Chapter 6
Business Transaction
BUSINESS TRANSACTION ANALYSIS $
ANALYSIS Identify 1. Identify the accounts effected.
Classify 2. Classify the accounts effected.
+ / – 3. Determine the amount of the increase or decrease for each account effected. $

13. Business Transaction (cont'd.)
Chapter 6 $
Recording a General Journal Entry (cont'd.) $
Business Transaction (cont'd.)
BUSINESS TRANSACTION ANALYSIS (cont'd.) $
DEBIT-CREDIT RULE 4. Which account is debited? For what amount?
5. Which account is credited? For what amount? $

14. Chapter 6
The General Journal

15. $ $ $ $ Recording a General Journal Entry Chapter 6
The general journal is an all purpose journal in which all the transactions of a business may be recorded. $
1 Date of the
transaction
2 Name of the account
debited
3 Amount of the debit $ $
4 Name of the
account credited
6 Source document
reference or an
explanation
5 Amount of the
credit