Solved Posting the transactions in bookkeeping means Financial accounting theory BBAC 502

Explain the difference between a ledger and a chart of accounts. Explain why writing off an account does not affect accounts receivable. Prepare Sun Ltd.’s account in Ted Ltd.’s books of ledger.

• This is posted to the Cash T-account on the credit side beneath the January 14 transaction.
• Run a trial balance and other reports to be sure the proper accounts were changed and the transactions were posted correctly.
• This form of a ledger is a safe form with conveniences.
• When account numbers are assigned in the Chart of Accounts, the numbers assigned are based on the account type.
• Many times the accounts payable module or other module is not properly mapped to general ledger and needs corrections.
• The procedure of transferring an entry from a journal to a ledger account is known as posting.

For example, https://www.bookstime.com/book, Purchase book, Sales book, Purchase & sales return book, Bills receivable & payable books & Journal Book. There is a large scale business that may keep their daybooks with different columns as per their requirements of ledger posting in accounting. The final step in the posting process is to check for mathematical and data transfer errors. Accounting software packages may reduce these errors through automation, but verifying the numbers is a prudent step that prevents errors from propagating to the financial statements.

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Form of Ledger

Since you paid this money, you now have less of a liability so you want to see the liability account, accounts payable, decrease by the amount paid. This is posted to the Cash T-account on the debit side. You will notice that the transactions from January 3, January 9, January 12, and January 14 are listed already in this T-account. The next transaction figure of $2,800 is added directly below the January 9 record on the debit side. The new entry is recorded under the Jan 10 record, posted to the Service Revenue T-account on the credit side. A three-step process will be used to demonstrate how to record each transaction and post it to the ledger.

Click here to see the journal entries we will be using. You also have more money owed to you by your customers. You have performed the services, your customers owe you the money, and you will receive the money in the future. Debit accounts receivable as asset accounts increase with debits. In the journal entry, Accounts Receivable has a debit of $5,500. This is posted to the Accounts Receivable T-account on the debit side. This is posted to the Service Revenue T-account on the credit side.

Financial accounting theory

Posting in Accounting is an asset and will decrease on the credit side. This is a transaction that needs to be recorded, as Printing Plus has received money, and the stockholders have invested in the firm. On January 30, 2019, purchases supplies on account for $500, payment due within three months. On January 9, 2019, receives $4,000 cash in advance from a customer for services not yet rendered. On January 5, 2019, purchases equipment on account for $3,500, payment due within the month.

• Recall that the general ledger is a record of each account and its balance.
• If you credit an account in a journal entry, you will credit the same account in posting.After transactions are journalized, they can be posted either to a T-account or a general ledger.
• As stated earlier, posting is recording in the ledger accounts the information contained in the journal.
• This is posted to the Dividends T-account on the debit side.
• If the total debits are more than the credits, the difference amount is written as balance carried down on the credit side of the ledger.
• One of the main duties of a bookkeeper is to keep track of the full accounting cycle from start to finish.

This balance is transferred to the Cash account in the debit column on the trial balance. Accounts Payable ($3500), Unearned Revenue ($4000), Share Capital ($20000) and Revenue ($5500) all have credit final balances in their T-accounts.

How to Know What to Debit and What to Credit in Accounting

Accounts Payable is used to recognize this liability. This liability is increasing, as the company now owes money to the supplier. A liability account increases on the credit side; therefore, Accounts Payable will increase on the credit side in the amount of $3,500. The dollar value of the debits must equal the dollar value of the credits or else the equation will go out of balance.

• Revenue accounts increase with credit entries, so credit lawn-mowing revenue.
• This will go on the debit side of the Supplies T-account.
• The video provides a clear description of where in the accounting cycle posting occurs.
• If there were a $4,000 credit and a $2,500 debit, the difference between the two is $1,500.
• Under the head, “Amount” enter the currency value of credit as mentioned in the journal entry.