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journalizing and post journal

The document outlines the process of recording and posting journal entries to the general ledger using double-entry bookkeeping. It emphasizes the importance of maintaining accurate records for financial statements and provides steps for creating journal entries and transferring them to the ledger. Additionally, it highlights the benefits of organized ledger entries in tracking financial health and avoiding accounting mistakes.

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3 views

journalizing and post journal

The document outlines the process of recording and posting journal entries to the general ledger using double-entry bookkeeping. It emphasizes the importance of maintaining accurate records for financial statements and provides steps for creating journal entries and transferring them to the ledger. Additionally, it highlights the benefits of organized ledger entries in tracking financial health and avoiding accounting mistakes.

Uploaded by

arelatadojr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Each account type can have various sub-accounts within

them. For example, assets may include checking or


savings accounts.
To post to the general ledger, you must use double-entry
bookkeeping. With double-entry bookkeeping, you record
two entries for every transaction using debits and credits.
Your general ledger provides the necessary information to
create financial statements, like your business balance
sheet, cash flow statement, and income statement. In
turn, your financial statements can give you a clear
snapshot of your business’s finances.
Journal entries overview
Every time your business makes a transaction, you must
record it in your books. There are a few steps you have to
follow when accounting for a transaction. The first step is
to record transactions in a journal.
Use your journal to identify transactions. Your journal
gives you a running list of business transactions. Each
line in a journal is known as a journal entry. And, each
journal entry provides specific information about the
transaction, including:
 Date of the transaction
 Description / Notes
 Account name
 Amount (e.g., $100)
Journal entries also use the five main accounts and sub-
accounts to stay organized. And, journal entries
use/require debits and credits. When recording journal
entries, make sure your debits and credits balance.
Debits and credits affect the five main accounts
differently. Some accounts are increased by debits while
others are increased by credits. Use the chart below to
see how debits and credits affect accounts:
Journal entries: Example
Journal entries may sound confusing at first. But once you
get the hang of it, recording journal entries will be less
intimidating. Take a look at how it’s done below.
Say you paid rent for your business location. Your rent is
$1,500 per month. Your journal entry would look
something like this:

Your Expense account increases with a debit. Debit your Expense account
1,500 to show an increase from the rent expense. Your Cash account is an
asset. To decrease your Cash account, credit it 1,500.
Posting journal entries to the general ledger

After you record transactions in your journal, it’s time to transfer them to
your general ledger. To keep your books accurate, post every transaction
from your journal to your general ledger.

Use your ledger to classify and organize transactions. When posting entries
to the ledger, move each journal entry into an individual account.

Transfer the debit and credit amounts from your journal to your ledger
account. Your journal entries act like a set of instructions. When posting
journal entries to your general ledger, do not change any information. For
example, if you debit an account in a journal entry, debit the same account
in your ledger.

Keep in mind that your general ledger lists all the transactions in a single
account. This allows you to know the balance of each account. But to find the
balance, you need to do some math. After posting entries to the ledger,
calculate the following balances:

 Asset and expense accounts: Subtract total credits from total debits

 Liabilities, equity, and revenue accounts: Subtract total debits from


total credits

If you don’t want to mess with the calculations yourself, consider investing
in accounting software. With accounting software, you can record
transactions in your ledger and the software handles the calculations for you.

If you’re a little lost—don’t stress. Instead, follow the steps below to post
journal entries to the general ledger:

1. Create journal entries

2. Make sure debits and credits are equal in your journal entries

3. Move each journal entry to its individual account in the ledger (e.g.,
Checking account)

4. Use the same debits and credits and do not change any information

5. Calculate account balances in your general ledger

How to post journal entries to the general ledger: Example


To keep your records accurate, you should post to the general ledger as you
make transactions. At the end of each period (e.g., month), transfer journal
entries into your ledger.

Ledger entries are separated into different accounts. The accounts, called T-
accounts, organize your debits and credits for each account. There is a T-
account for each category in your accounting journal.

Here’s an example of what your general ledger account may look like after
posting journal entries:

The Subtotal row gives you details about the subtotals for your debits and
credits. Because this is a Checking (asset) account, deduct the credits from
your debits to get the account’s total balance.

Why are ledger entries important?

There are several reasons why ledger entries are oh-so-important. Ledger
entries:

 Keep you organized

 Make it easier to find transactions


 Compartmentalize transactions

 Let you see the big picture of your company’s financial health

 Show you patterns in income and expenses

Along with the above perks, posting entries to the general ledger helps you
catch accounting mistakes in your records. Catching mistakes early on helps
you steer clear of bigger problems down the road, like inaccurate financial
reports and tax filings.

Keeping your ledger up-to-date can help you avoid penalties and ensure that
your records give you an accurate picture of your business’s finances.

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