Chapter02-Accounting-Cycle-(I)-Journalizing--Posti

Chapter2AccountingCycle(I)Journalizing,PostingandPreparingTrialBalanceAccountingCycleAccountingcycle:asequenceofaccountingprocedureswhicharerepeatedcontinuouslyduringeachaccountingperiod.Anaccountingperiod/fiscalperiod:anyspanoftimecoveringacompleteaccountingcycle.Anaccountingyear/fiscalyear:anaccountingperiodcomposedoftwelveconsecutivemonths.AccountingCyclejournalizebusinesstransactionspostjournalentriestoledgeraccountsprepareatrialbalancecompleteaworksheetpreparefinancialstatementsjournalizeandposttheadjustingentriesjournalizeandposttheclosingentriesprepareapost-closingtrialbalanceTheGeneralJournalAjournal:abookinwhichallbusinesstransactionsareinitiallyrecorded.Theprocessofrecordingbusinesstransactionsinthejournaliscalledjournalizing.Thesimplestformofjournaliscalledageneraljournal.DATEDESCRIPTIONPOSTREF.DEBITCREDITGENERALJOURNALPAGETheGeneralJournalTheGeneralLedgerGeneralledger:abookcontainingalltheledgeraccountsofabusiness.DATEITEMPOSTREF.DEBITCREDITBALANCEDEBITCREDITGENERALLEDGERACCOUNTACCOUNTNO.TheChartofAccountsChartofaccounts:theofficiallistofalltheaccountsandtheiraccountnumbers.e.g.GuangliServicesChartofAccountsAssets(100-199)Owner’sEquity(300-399)111Cash311Li,Capital112AccountsReceivable312Li,Drawing113PrepaidInsurance121TrucksRevenue(400-499)123Equipment411IncomefromServices125HouseExpenses(500-599)Liabilities(200-299)511GasExpense211AccountsPayable512UtilitiesExpense513WagesExpensePostingtotheGeneralLedgerPosting:Theprocessoftransferringthejournalentriesfromthejournaltoledgeraccounts.Generally,wefollowfoursteps:Enterthedateoftransaction;Entertheamountoftransactionandthenewbalanceoftheaccount;InsertthepagenumberofthejournalinthePostingReferencecolumnoftheledgeraccount(cross-reference);InserttheledgeraccountnumberinthePostingReferencecolumnofthejournal.GENERALJOURNALPAGEDATEDESCRIPTIONPOSTREF.DEBITCREDIT200×Jan.1Cash111100000000Li,Capital100000000OriginalinvestmentbyMr.LiinGuangliServices.GENERALLEDGERACCOUNTCashACCOUNTNO.111DATEITEMPOSTREF.DEBITCREDITBALANCEDEBITCREDIT200×Jan.111000000001000000001①②②③④e.g.Afterallthetransactionspostedfromthejournal,wecanformacompleterledger.(Anexamplecanbeseenonp35-38.)Atrialbalance(referredtoChapter1)canbepreparedtohelpyouprovetheequalityoftotaldebitamountsandtotalcreditamounts.PostingtotheGeneralLedgerGuangliServicesTrialBalanceJanuary31,200×DEBITCREDITCash444450AccountsReceivable1300PrepaidInsurance3600Trucks240000Equipment9000House360000AccountsPayable40000Li,Capital1000000Li,Drawing500IncomefromServices28300GasExpense200UtilitiesExpense250WagesExpense900010683001068300e.g.