2 BellringerThink about the process in writing a research paper. Why do we take notes before we write the paper?
3 Enduring Understanding: The General Ledger is a permanent record that organizes the details of all business transactions and their accounts.
4 Essential Questions How do you set up the general ledger? How do managers use journals and ledgers?
5 What is a General Ledger? How do you set it up? Permanent record organized by account number.Chart of Accounts:Assets 100’sLiabilities 200’sOwner’s Equity 300’sRevenues 400’sExpenses 500’s
6 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.
7 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
9 Account Name: Cash in Bank ACCT #: 101 DateDescriptionPostRefDebitCreditBalance2010 Dec31$25,000
10 Work on Problem 7-1 Pg 167 in Text and Workbook Pg 94
11 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.
12 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
13 What you already know….You know how to analyze a business transaction using the four analytical steps!IdentifyClassifyIncrease or DecreaseBalanceYou know the Debits and Credits of Each TransactionYou know how to Journalize
14 Today you will be able to…. Locate the important information from a journal and move that information to it’s ledgerFind the current (and ending) balance of each different account throughout an accounting periodCorrectly post each transaction to their appropriate ledger account
15 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)
17 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
18 Date Description Debit Credit Jan 1 Cash in Bank Mrs. Nemec, Capital 6 PostRefDebitCreditJan1Cash in Bank$25,000Mrs. Nemec, Capital6Maintenance Expense$5,000
19 Take that Information & put it into the “Cash in Bank” Ledger
20 Account Name: Cash in Bank ACCT #: 101 DateDescriptionPostRefDebitCreditBalanceJan1G1$25,0006$5,000
21 Remember to…A new account balance is computed each time a transaction is posted to an account.If you have a Debit BalanceADD DebitsSUBTRACT CreditsIf you have a Credit BalanceADD CreditsSUBTRACT DebitsLastly…. Find the Ending Balance!