Journal Basics
What is the purpose of a journal?
To record business transactions in chronological order.
A record of all accounts and their balances.
general ledger
Which side increases an asset?
debit
What step comes after recording in the journal?
posting to the ledger
You debit Supplies and credit Cash for $300. What happens to your balances?
Supplies increases; Cash decreases.
What are the two parts of every journal entry?
Debit and Credit.
What is the purpose of posting?
To transfer amounts from the journal to the ledger.
Which side increases a liability?
Credit side.
Why do we use posting references?
To link the journal and ledger for accuracy and tracking.
If you post a $1,000 credit to Service Revenue, what happens?
Service Revenue increases by $1,000.
What is another name for the journal?
The book of original entry.
What is entered in the posting reference column of the ledger?
The journal page number.
When cash is received, what happens to the Cash account?
it is debited
When posting, what is recorded first in the ledger?
The date of the transaction.
You debit Accounts Payable $500 and credit Cash $500. What does this represent?
Paying off a debt owed to a supplier.
What is written in the description column
A brief explanation of the transaction.
What happens if you forget to post an entry?
The ledger and trial balance will be inaccurate.
Paying off Accounts Payable affects which two accounts?
Debit Accounts Payable, Credit Cash.
What symbol or mark shows that a transaction has been posted?
A check mark (✓) in the PR column of the journal.
How would you post this: Owner invests $5,000 cash?
Debit Cash $5,000; Credit Owner’s Capital $5,000.
What do you post journal entries to after completing the general journal?
General Ledger
What financial statement step follows the ledger?
Preparing a trial balance
If Owner’s Capital increases, what side is it recorded on?
credit
Why should you post daily in a business?
To keep account balances up to date.
$1,600 (increase in asset).