Analysing and Recording
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Steps in the Recording Process
1 - Using the source document (invoice, cheque, cash register tape), analyse each transaction in terms of its effects on the accounts.
2 - Enter the transaction information in a journal.
3 - Transfer (Post) the information from the journal to the appropriate accounts in the general ledger.
A chronological record of all transactions.
The complete effect of a transaction is disclosed in one place.
Helps prevent errors as Dr and Cr amounts are easily compared.
Transactions are initially recorded in the journal before they are transferred to the ledger accounts to update the ledger.
Contains all asset, liability and equity accounts.
Posting to Ledger Accounts
1 - Enter the date in the account to be debited.
2 - In the particulars, enter the name of ledger account to be credited.
3 - Enter the amount to be debited.
4 - Tick the account number in the general journal to show entry is posted.
5 - Repeat 1-4 for the credit side.
Trial Balance Errors
Is the addition correct?
Are all accounts listed?
Are balances correctly listed?
Divide the difference between Dr and Cr columns by 2, is there a balance for this amount posted?
Divisible by 9, is it a transposition error?
Limitations of a Trial Balance
A transaction not journalised.
A correct journal entry is not posted.
A journal entry is posted twice.
Incorrect accounts used in journalising or posting.
Offsetting errors made in recording the amount of a transaction.
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