General Journal
records all types of financial transactions in chronological order.
What is a general journal?
is a physical record or electronic file that provides evidence of a transaction.
What is a source document?
What is the rule for debits and credits in accounting?
Debits must equal credits for every transaction to maintain the accounting equation.
What is a T account and how is it structured?
A T account is a visual representation used to analyze transactions, structured with a left side for debits and a right side for credits.
Name one advantage of using a general journal.
One advantage is that it provides a complete record of transactions, making it easier to track the history of entries.
Give two examples of source documents.
Examples include invoices and receipts.
How does a debit affect an asset account?
A debit increases the balance of an asset account.
What does the left side of a T account represent?
The left side represents debits.
How do you correct an entry in a general journal?
To correct an entry, you draw a line through it with a pen and enter the correct information above the line.
How do source documents support accounting entries?
They provide proof and details of transactions, ensuring accuracy and legitimacy.
How does a credit affect a liability account?
A credit increases the balance of a liability account.
The T account is a version of the _____________
Ledger
Describe the role of the general journal in the accounting cycle.
The general journal serves as the initial entry point for transactions, which are later posted to the ledger accounts.
What information is typically found on a receipt?
A receipt typically includes the date, amount, description of the transaction, and the parties involved.
Explain the impact of debits and credits on equity.
Debits decrease equity, while credits increase equity.
What does the right side of a T account represent?
The right side represents credits.
What is the order of transactions in a journal?
Transactions are recorded in the order they occur, typically by date.
Why is accuracy in source documents crucial for accounting?
Accuracy is crucial to ensure the integrity of financial records and compliance with regulations.
Give an example of a transaction involving both a debit and a credit.
Purchasing equipment for cash: Debit Equipment, Credit Cash.
How can T accounts help in the preparation of financial statements?
T accounts help summarize the balances of accounts, which are necessary for preparing financial statements.