The General Journal

Key Vocabulary

Accounting Cycle Source Document

› Invoice› Receipt› Memorandum› Check Stub

Journal Journalizing

Calendar Year Fiscal Year General Journal

The Accounting Cycle

1. Collect and verify source documents

2. Analyze each transaction

3. Journalize each transaction

Source Documents

Source documents are the evidence of business transactions.

Invoice – records date, quantity, description, delivery, etc.. About a transaction

Receipt – a record of cash received by a business

Memorandum – Internal document used Check Stub – used by business for cash

transactions. Contains data about transaction. Also lists account balance before and after transaction.

Analyzing a Source Document

Ask the following questions when analyzing a source document:

1. What is the date of the transaction?2. What is the amount of the

transaction?3. What type of source document is it?4. What are the payment terms (cash,

check, on account, etc..)5. What is the name of the other party?

The Accounting Period

Calendar Year – January 1 – December 1 of a year.

Fiscal year – An Accounting period of 12 months, not starting on January 1.

The General Journal

It is a permanent record of the financial transactions of a business.

A place where all of the business transactions are recorded.› Kind of like a daily diary.

Components of the Journal

GENERAL JOURNAL PAGE _______

DATE DESCRIPTION

POST REF.

DEBIT CREDIT

1 1

2 2

3 3

4 4

Analysis - Review

Analysis Identify

Classify

+/-

Balance

1. Identify the accounts affected.

2. Classify the accounts affected.

3. Determine the amount of increase or decrease for each account affected.

4. Make sure the accounting equation remains in balance.

Debit and Credit Analysis

Analysis Identify

Classify

+/-

Debit-Credit

T - Accounts

1. Identify the accounts affected.

2. Classify the accounts affected.

3. Determine the amount of Inc. or Dec.

4. Which account is debited? Amount?

5. Which account is credited? Amount?

6. What is the entry in T- account form?

Journal Analysis

Analysis Identify

Classify

+/-

Debit-Credit

T - Accounts

Journal Entry

1. Identify the accounts affected.

2. Classify the accounts affected.

3. Determine the amount of Inc. or Dec.

4. Which account is debited? Amount?

5. Which account is credited? Amount?

6. What is the entry in T- account form?

7. What is the entry in General Journal form?

Correcting Errors An error should never be erased! A single line placed through the error

with the correction on top.

GENERAL JOURNAL PAGE _______

DATE DESCRIPTION POST

REF.DEBIT CREDIT

1 2011 1

2 Oct 1Cash in Bank 52

0 0 000 2

3 John Smith, Capital 52

0 0 000 3

4 Memorandum 1 4

5 5

Balancing

Each page should be totaled and balanced.

For each debit there must be an equal credit.

If columns do not balance – check source documents for errors.