Presentation on theme: "Posting to the General Ledger Chapter 7. Bellringer Think about the process in writing a research paper. Why do we take notes before we write the paper?"— Presentation transcript:
Bellringer Think about the process in writing a research paper. Why do we take notes before we write the paper?
Enduring Understanding: The General Ledger is a permanent record that organizes the details of all business transactions and their accounts.
Essential Questions How do you set up the general ledger? How do managers use journals and ledgers?
What is a General Ledger? How do you set it up? Permanent record organized by account number. Chart of Accounts: –Assets 100’s –Liabilities 200’s –Owner’s Equity 300’s –Revenues 400’s –Expenses 500’s
What is a General Ledger? How do you set it up? The “General Ledger” can be maintained manually or electronically. (The book that holds each specific ledger account) Ledger - each “account” has it’s own page, file or card (All accounts together form the General Ledger). Ledger account form – Stationary used to record the specific information about each account.
Step 1: For Each Account… Account Name: Cash in Bank (top of page) Account Number: 101 (on ledger account form) NOTE: Computerized accounting system similar, still need account name and number at a minimum
Account Name: Cash in Bank ACCT #: 101 Date Descriptio n Post Ref DebitCredit Balance DebitCredit 2010 Dec 31Balance $25,000
Work on Problem 7-1 Pg 167 in Text and Workbook Pg 94
What is Posting? Fourth step in Accounting Cycle. Process of transferring information from the journal to individual general ledger accounts. Also known as “ recording” Creates a record of impact of business transaction on each account used by the business.
Why do we post? Managers continually use the information from accounting records. Can easily find the current balance of a specific account. –Cash Flow – which bills to pay due to short funds (bad economy) Real World Example: PIC’s cash on hand
What you already know…. You know how to analyze a business transaction using the four analytical steps! –Identify –Classify –Increase or Decrease –Balance You know the Debits and Credits of Each Transaction You know how to Journalize
Today you will be able to…. Locate the important information from a journal and move that information to it’s ledger Find the current (and ending) balance of each different account throughout an accounting period Correctly post each transaction to their appropriate ledger account
In your Notebooks… Write a brief statement explaining the importance of Posting to the Ledger & How it is useful to you as Accountants (Give an example)
Step 2: Stay Organized…. Find the similar account transactions first…. Find it’s important information (date, whether it was debited or credited, and for what amount) Lastly …. Post it to it’s ledger
DateDescription Post Ref DebitCredit Jan1Cash in Bank $25,000 Mrs. Nemec, Capital $25,000 6 Maintenance Expense $5,000 Cash in Bank$5,000
Take that Information & put it into the “Cash in Bank” Ledger
Account Name: Cash in Bank ACCT #: 101 DateDescription Post Ref DebitCredit Balance DebitCredit Jan1G1$25,000 6G1$5,000
Remember to… A new account balance is computed each time a transaction is posted to an account. If you have a Debit Balance –ADD Debits –SUBTRACT Credits If you have a Credit Balance –ADD Credits –SUBTRACT Debits Lastly…. Find the Ending Balance!
DateDescription Post Ref DebitCredit Balance DebitCredit Jan1G1$25,000 6G1$5,000$20,000
Ending Balance as of January 25 DateDescription Post Ref DebitCredit Balance DebitCredit Jan1G1$25,000 6G1$5,000$20,000 8G1$15,000$35,000 10G1$12,000$47,000 25G1$7,000$40,000
Now try it yourselves!! Complete Problem 7-2 and show it to me when you are finished! Continue then to work on Problem 7-5