Question

household transactions for ledger

Answer 1

Accounting is the art of recording, classifying and summarising financial transactionsand interpreting the resultstherefore. Thus, the accounting process or cycle involvesthe following stages:1. Recording of transactions. This is done in the book termed as ‘Journal’.2. Classifying the transactions. This is done in the book termed as ‘Ledger’.3. Summarising the transactions. This includespreparation of the trial balance,profit and loss account and balance sheet of the business.4. Interpreting the results. This involves computation of various accountingratios, etc., to know about the liquidity, solvency and profitability of business.The recording of transactions in the Journalis being explained in this unit.

Answer 2

Many businesses close the books on their fiscal year June 30th, and July 1st begins a new fiscal period. That’s the approach we are taking in our house as well. So what’s the big idea? We plan to write down all income and expenses in a ledger book…with a pen.

That’s right; every single transaction, from the monthly electrical bill to the Sunday afternoon run for an ice cream cone, everything goes down in writing. We got the idea from fellow blog reader, and frequent Frugal Dad commenter, Mrs. White, who blogs at The Legacy of Home.