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General Ledger


ledger accounts: acc records showing all the transactions that affect a particular item
general ledger: the collective name for the main group of ledger accounts
double entry rules: 1. every transaction must be recorded in at least 2 ledger accounts _____ 2. every transaction must be recorded on the debit side and credit side of another ledger
assets increase: debit side
liabilities increase: credit side
expenses increase: debit side
revenues increase: credit side
owners equity: credit side
NOTE about NOTATION: may or may not be required for certain questions
TIP RE how to answer questions: 1. state relevant AC/QC _____ 2. explain what they are ____ 3. link theory back to question
cross reference: the name of the other account affected by a transaction, so that both accounts affected by a particular transaction can be identified
analysing chart: a tool used to identify the steps for recording transactions in the general ledger
footing: an informal process used to determine the balance of a larger account
footing process: 1. pencil total debit side below the last debit amount ___ 2. total credit side below the last credit amount ___ 3. deduct small total from the larger total __ 4. pencil the figure (the balance) on the side of the larger total, and draw a circle around it
balancing: ruling off an asset, liability or OE account to determine its balance at the end of the reporting period and transferring that balance to the next reporting period
what accounts are balanced? A, L, OE NOT rev/exp they are closed
when are accounts balanced? end of reporting period
List three differences between footing and balancing a ledger account. Balancing is done only at the end of the Reporting Period. Only asset, liability and owner’s equity accounts are balanced. Balancing is a more formal process, involving a proper double entry.
SPECIAL JOURNALS: totals posted to GL --summarise similar transactions -- reduces no. entries in required --increases efficiency of recording system -- Individual transactions are posted to subsidiary ledgers the day they occur --total of each S ledger posted to GL monthly
GENERAL JOURNAL acc record used to record infrequent, non-cash transactions, which cannot be recorded in the special journals--Record debits first , then credits , then capital as a credit--Narrations describe the transaction - they need it because infrequent transaction
CONTROL ACCOUNTS: Summarise the info in subsidiary ledger accounts___Includes posted totals. Debtors,creditors, stock control accounts___ Improves efficiency of ac system___Summary of all debtors/creditors___Improves relevance
SUBSIDIARY LEDGERS: individual transactions for debtors and creditors____Total of all creditors posted to control account
SCHEDULES: totals of each individual subsidiary ledger is totaled here then checked against control account.____Reliability
TRIAL BALANCE Lists totals of all general ledger accounts____prepared to check if the recording has been done correctly with debits equalling credits___lists A, L then R then E
TRIAL BALANCE: errors detected: adding up errors ___ incorrect amount in one of the entries___ leaving out either the debit or the credit entry
TRIAL BALANCE: errors undetected: leaving out a transaction___ entering same incorrect amount in both credit and debit entries, ___ reversing debits and credits ___recording a debit or credit in the wrong ledger account
strategies used it trial balance does not balance: re-total figures in trial balance ___ check if all ledger accounts have been included___ check that totalling/footing/balancing of individual ledgers are correct___ check that each individual transaction has been recorded correctly
Created by: 96.0