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General Ledger
UNIT 3 CH 3
| Question | Answer |
|---|---|
| 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 |
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