Explain various steps in the process of journalising.
Answers
Answer:
Explanation:
Step 1: Identify the accounts and the account type. You need this information before you can complete the next step. Step 2: Decide if each account increases or decreases using the rules of debits and credits. Reviewing the rules of debits and credits, we use the accounting equation to help determine debits and credits for each account. Step 3: Record transactions in the journal using journal entries. Step 4: Post the journal entry to the ledger. When journal entries are posted from the journal to the ledger, the dollar amount is transferred from the debit and credit columns to the specific accounts in the ledger. The date on the journal entry should also be transferred to the accounts in the ledger. Step 5: Determine whether the accounting equation is in balance. After each entry the accounting equation should always be in balance.12.What are the four parts of a journal entry?Part 1: Date of the transaction. Part 2: Debit account name and dollar amount. Part 3: Credit account name and dollar amount. The credit account name is indented. Part 4: Brief explanation.13.What is involved in the posting process?When transactions are posted from the journal to the ledger, the dollar amount is transferred from the debit and credit columns to the specific accounts in the ledger. The date of the journal entry is also transferred to the accounts in the ledger. The posting reference columns in the journal and ledger are also completed. In a computerized system, this step is completed automatically when the transaction is recorded in the journal.14.What is the purpose of the trial balance?The trial balance is used to prove the equality of total debits and total credits of all accounts in the ledger; it is also used to prepare the financial statements.15.What is the difference between the trial balance and the balance sheet?A trial balance verifies the equality of total debits and total credits of all accounts on the trial balance and is an internal document used only by employees of the company. The balance sheet, on the other hand, presents the business’s accounting equation and is a financial statement that can be used by both internal and external users.
Answer:
Every business organization carries various transactions throughout the day. Some transactions are similar, many are different. Hence, it is not possible to keep all the journalising process in mind without recording it. All these transactions are important and therefore can’t be avoided or omitted. So, to avoid any mistake or omission, all these transactions are recorded in books. Journalising is the traditional form of keeping track of happenings in the organization.
Journal is the book of prime entry also called the book of original entry. That is, transactions are first entered here and is the most important book of accounts. The transactions are recorded systemically and in chronological order.
They are entered to show which accounts should be debited or credited. Recording of transactions in “Journal” is called as “Journalising the entries”
“Journal” is derived from the Latin word ‘Jour’, which means ‘a day’. The transactions are first entered here and it is then subsequently posted to another account book called as “Ledger”.
Importance of Journal
Information recorded in the journal which certainly serves as a proof or evidence in the court of law.
It provides the base for ledger posting and also for cross-checking of entries posted.
It maintains the detailed record of transactions in the form of narration, written immediately after passing the entry hence is provides a highlight of the transaction done.
Because the transactions are recorded in chronological order it is useful for easy reference in the future.