Chapter Terms
A form used to summarize all the changes to a single account
What is an account form
What are the procedures for file maintenance?
Arranging accounts in a general ledger, assigning account numbers, and keeping records current
Transferring information from a journal entry to a ledger account is
Posting
What are the sub headings in a chart of accounts?
Assets, Liabilities, Owner's Equity, Revenue, Expenses
Describe 2 parts of an account number
First digit indicates which general ledger division the account is located. Second and third digit indicate location of the account within that division
A ledger is....
A group of accounts
How do you open an account?
Writing an account title and number on the heading of an account
What is the final step when posting an entry?
Return to the journal and write the account number
What are the subheadings for liabilities and expenses in a chart of accounts?
200 & 500
Which two amounts are compared when proving cash?
The cash balance in the checkbook and the cash balance in the cash account
A ledger that contains all accounts needed to prepare financial statements is called a
General ledger
What is the first step when correcting an amount posted in the wrong column?
Draw a line through the incorrect item in the account
What type of source document is prepared when making a correcting entry?
A memorandum
Your expense accounts may be organized _________ in your chart of accounts.
When both debit and credit amounts have been posted to an account, what determines whether the balance is a debit or a credit?
Whenever the debits in an account exceed the credits, the balance is a debit.
Whenever the credits in an account exceeds the debits, the balance is a credit.
Determining that the amount of cash agrees with the balance of the Cash account in the accounting records is called
Proving cash
List the first 3 steps of posting from the general journal to the general ledger.
1. Write the date in the Date column of the account.
2.Write the journal page number in the Post. Ref. column of the account.
3.Write the amount in the Debit or Credit column.
A journal was posted that debited land for $300 instead of supplies. What are the debited and credited accounts and amount in the correcting entry?
Debit- supplies $300
Credit- Land $300
You have expenses of
510 Advertising Expense
520 Utilities Expense
You now have expenses of Phone Expense and Wages Expense. What are their account numbers & where do they go?
515 Phone Expense (between advertising and utilities)
530 Wages Expense (after utilities)
When is a correcting entry necessary?
When a transaction has been improperly journalized and posted to the ledger
A correcting entry is...
An additional journal entry prepared to correct an incorrect journal entry
What are the 5 steps for posting an entry?
1. Write the date in the Date column of the account.
2. Write the journal page number in the Post. Ref. column of the account.
3. Write the amount in the Debit or Credit column.
4.Calculate and write the new account balance in the Balance Debit or Balance Credit column.
5.Return to the journal and write the account number in the Post. Ref. column of the journal.
When an incorrect amount is posted, what are the steps taken in the account ledger to correct it?
1. Draw a line through the incorrect amount.
2. Write the correct amount just above the incorrect amount in the same space
3. Recalculate the account balance.
Which account is usually the first in assets?
Cash
Why is posting necessary?
To see the transactions and changes in balances within each account. This then allows us to prepare trial balances and create financial statements.