Lesson 4 - The Recording Process
Learning Goals: By the end of this lesson you will be able to
A farmer wants to cross a river and take with him a wolf, a goat and a cabbage. He has a boat, but it can only fit himself plus either the wolf, the goat or the cabbage. If the wolf and the goat are alone on one shore, the wolf will eat the goat. If the goat and the cabbage are alone on the shore, the goat will eat the cabbage. How can the farmer bring the wolf, the goat and the cabbage across the river without anything being eaten?
Account An account is an individual accounting record of increases and decreases in a specific asset, liability, or owner’s equity item.
Debits and Credits The term debit means left and the term credit means right. Entering an amount on the left side of an account is called debiting the account and entering an amount on the right side of an account is called crediting the account.
Double-Entry Accounting , each transaction must affect two or more accounts to keep the accounting equation in balance. This is known as the double-entry accounting system.
The general journal Discloses in one place the complete effect of a transaction. Provides a chronological record of transactions, Helps to prevent or locate errors because the debit and credit amounts for each entry can be easily compared.
The General Ledger The general ledger is the entire group of accounts maintained by a company, including all assets, liabilities, equity, revenues and expenses.
Posting / Chart of Accounts Posting is the procedure of transferring journal entries to the ledger accounts. Posting accumulates the effects of journalized transactions in the individual accounts
Trial Balance A trial balance is a list of accounts in the ledger and their balances at a specific time.
TRIAL BALANCE EXPLAINED
https://courses.lumenlearning.com/sac-finaccounting/chapter/preparing-a-trial-balance/
After watching the video answer the following questions.
1.Which columns are included in a Trial Balance?
2.What are the purpose of a Trail Balance?
HOW TO DETECT AN ERROR IN THE TRIAL BALANCEGeneral ledger template and T account template is uploaded with this assignment.
Suggested Questions:
E2-3, E2-6, E2-7, E2-8, E2-11, P2-2A, P2-7A, P2-11A, BYP2-3
Review - Self Study Questions and Brief exercise