1. Learning Objective This lecture will cover following areas:
An overview of the flow of transactions.
An introduction to the basic books of accounts.
The General Ledger, and
The ledger balance

2. The Flow Of Transactions
Lecture 1
The Flow Of Transactions
Occurrence of an Event
The Voucher
General Journal
General Ledger
Cash/Bank Book
Trial Balance
Profit & Loss Account
Balance Sheet

3. Lecture 1
The Voucher
Occurrence of an Event
The Voucher
Voucher is a document in a specific format that records the details of a transaction.
It is accompanied by the evidence of transaction.

4. A Sample Voucher Name Of Company Type Of Voucher Date: 1-1-20-- No: 01
Lecture 1
A Sample Voucher
Name Of Company
Type Of Voucher
Date:
No: 01
Description
Code #
Debit
Amount
Credit Amount
Cash 01
100,000
Capital 02
Total:
Narration:
Capital Introduced in Cash by Owner
Prepared By:
Checked by:

5. Lecture 1
The General Journal
General Journal
The Journal used to be a chronological (day-to-day) record of business transactions. All vouchers were first recorded in books.
It was also called the Book of Original Entry or Day Book.
But in present day accounting and specially with the introduction of computers for accounting this book is not in use any more.
We will therefore not study the use of Journal in detail but we should know that it is a book that keeps day-to-day record of transactions.

6. The Present Day Flow Of Transactions
Lecture 1
The Present Day Flow Of Transactions
Occurrence of an Event
The Voucher
General Journal
General Ledger
Cash/Bank Book
Trial Balance
Profit & Loss Account
Balance Sheet

7. General Ledger – The ‘T’ Account
Lecture 1
General Ledger – The ‘T’ Account
Ledger – is a book that keeps separate record for each account (Book of Accounts).
We know that Account or Head of Account is systematic record of transactions of one type.
An account in its simplest form is a T-shape and looks like this:
Title of Account
Left hand side.
The Debit side.
Right hand side.
The Credit side.
A ‘T’ account

8. A Standard General Ledger
Lecture 1
A Standard General Ledger
Since the ledger keeps record of transactions that effect one head of account, therefore, it should provide all the information that a user may need.
Usually the ledger is required to provide following information:
Title of account
Ledger page number, called Ledger Folio / Account Code
Date of transaction
Voucher number
Narration / particulars of transition
Amount of transaction

9. A Standard General Ledger
Lecture 1
A Standard General Ledger
Capital Account (Title of Account) Account Code 02
Date
Voucher
Number
Particulars /
Narration
Debit
Amount
Credit Amount
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000

10. Recording From Voucher To General Ledger
Lecture 1
Recording From Voucher To General Ledger
Voucher
Date:
No: 01
Description
Code #
Debit
Amount
Credit
Cash 01
100,000
Capital 02
Narration:
Capital Introduced in Cash by Owner
Capital Account (Title of Account) Account code 02
Date
Voucher
Number
Particulars /
Narration
Debit
Amount
Credit Amount
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000

11. Completing The Recording – Both Effects
Lecture 1
Completing The Recording – Both Effects
VOUCHER
Description
Code #
Debit Amount
Credit Amount
Cash 01
100,000
Capital 02
Narration:
Capital Introduced in Cash by Owner
Capital Account Account Code 02
Date
Voucher Number
Particulars / Narration
Debit Amount
Credit Amount
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000
LEDGER
Cash Account Account Code 01
Date
Voucher Number
Particulars / Narration
Debit Amount
Credit Amount
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000

12. A Simple Presentation Of A Recorded Transaction
Lecture 1
A Simple Presentation Of A Recorded Transaction
Cash Account Code 01
Capital 100,000
Capital Account Code 02
Cash 100,000

13. Lecture 1
The Ledger Balance
In the earlier lecture we discussed that in order to have the total figure in respect of each head of expense/income, asset/liability we need to maintain different accounts.
We had also said that each account may have figures on the debit as well as the credit side.
Therefore, the difference between the debit and the credit sides, known as the BALANCE, would represent the required total of the particular account.
The total all balances on the Debit side is ALWAYS equal to the total of all balances on the Credit side. This is called the balancing of books of accounts. We will study about this concept at a later stage.
The balance may be written out after every transaction in a third column or calculated at the end of a specific time period (an accounting period).

14. Lecture 1
The Ledger Balance
A Debit balance is shown without brackets and a Credit balance in brackets (XYZ).
Cash Account Account Code 01
Date
Voucher
Number
Narration /
Particulars
Debit Amount
Credit Amount
Balance Dr/(Cr)
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000 02
Cash Paid for Purchase of Building
50,000
Jan 02 03
Cash Paid for Purchase of Furniture
10,000
40,000
Capital Account Account Code 02
Date
Voucher
Number
Narration /
Particulars
Debit Amount
Credit Amount
Balance Dr/(Cr)
20--
Jan 01 01
Capital Introduced in cash by Owner
100,000
(100,000)