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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-1 Preparing a Chart of Accounts -All transactions are recorded in a journal -A journal.

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Presentation on theme: "CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-1 Preparing a Chart of Accounts -All transactions are recorded in a journal -A journal."— Presentation transcript:

1 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-1 Preparing a Chart of Accounts -All transactions are recorded in a journal -A journal does not show, in one place, all the changes in a single account -An Account Form is used to summarize in one place all the changes to a single account -A separate Form is used for each account -Ledger – a group of accounts -General Ledger – a ledger that contains all accounts needed to prepare financial statements -Account number – number assigned to an account

2 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 Balance columns Balance – ruled account form – has columns for the debit and credit balance – account balance is calculated and recorded as each entry is recorded in the account Balance – ruled account form – has columns for the debit and credit balance – account balance is calculated and recorded as each entry is recorded in the account

3 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 4-1 CHART OF ACCOUNTS A list of account titles and numbers showing the location of each account in a ledger page 92 All accounts in the chart of accounts will have an account form in the General Ledger

4 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning ACCOUNT NUMBERS Assets = 100 Assets are listed by order of liquidity Liabilities = 200 Liabilities are listed in alphabetical order Owners Equity = 300 Capital, drawing, income summary Revenue = 400 Sales Expenses = 500 Expenses are listed in alphabetical order 4 LESSON 4-1 page 92 Divisions

5 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Assigning Account Numbers 5 LESSON 4-1 The account numbering system is determined by the size and nature of the business A three-digit account number will be assigned to each account Initial account numbers are assigned by 10s so new accounts can be added easily A new account listed between two existing accounts is assigned the middle, unused account number A new account listed at the end of a section is assigned the next number in the sequence of 10s File Maintenance – the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current The account numbering system is determined by the size and nature of the business A three-digit account number will be assigned to each account Initial account numbers are assigned by 10s so new accounts can be added easily A new account listed between two existing accounts is assigned the middle, unused account number A new account listed at the end of a section is assigned the next number in the sequence of 10s File Maintenance – the procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

6 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning Assigning Account Numbers Example: 510 Advertising Expense 520 Insurance Expense -Add a new account, Gasoline Expense LESSON Advertising Expense 515 Gasoline Expense 520 Insurance Expense Example: 550 Supplies Expense 560 Utilities Expense -Add a new account, Water Expense 550 Supplies Expense 560 Utilities Expense 570 Water Expense

7 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 7 LESSON Write the account title after the word Account in the heading. 2.Write the account number after the words Account No. in the heading. OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 12

8 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 8 LESSON 4-1 TERMS REVIEW ledger general ledger account number file maintenance opening an account page 95

9 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-2 Posting – transferring information from a Journal entry to a Ledger account.

10 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 10 LESSON Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the debit amount. 5.Return to the journal and write the account number. POSTING AN AMOUNT FROM THE DEBIT COLUMN OF A GENERAL JOURNAL page

11 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 11 LESSON 4-2 POSTING AN AMOUNT FROM THE CREDIT COLUMN OF A GENERAL JOURNAL page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the credit amount. 5.Return to the journal and write the account number

12 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 12 LESSON 4-2 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A DEBIT BALANCE page Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the debit amount. 5.Return to the journal and write the account number. 2

13 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 13 LESSON 4-2 POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A CREDIT BALANCE page 99 1.Write the date.4.Write the new account balance. 2.Write the journal page number. 3.Write the debit amount. 5.Return to the journal and write the account number

14 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 14 LESSON 4-2 JOURNAL PAGE WITH POSTING COMPLETED (continued on next slide) page 100

15 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 15 LESSON 4-2 JOURNAL PAGE WITH POSTING COMPLETED page 100 (continued from previous slide)

16 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 16 LESSON 4-2 TERM REVIEW posting page 101

17 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 4-3 Completed General Ledger, Proving Cash, and Making Correcting Entries

18 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 18 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 102 (continued on next slide)

19 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 19 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide)

20 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 20 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 103 (continued on next slide)

21 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 21 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide)

22 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 22 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 104 (continued on next slide)

23 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 23 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued on next slide)

24 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 24 LESSON 4-3 GENERAL LEDGER WITH POSTING COMPLETED page 105 (continued from previous slide)

25 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 25 LESSON 4-3 PROVING CASH page 106 Proving Cash – determining that the amount of cash as shown in the checkbook agrees with the balance of the cash account in the accounting records

26 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 26 LESSON 4-3 MEMORANDUM FOR A CORRECTING ENTRY page 106 Correcting Entry A journal entry made to correct an error in the ledger Correcting Entry A journal entry made to correct an error in the ledger

27 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 27 LESSON 4-3 November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $ Memorandum No. 15. JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page Source Document 3 Credit 1 Date 2 Debit

28 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 28 LESSON 4-3 TERMS REVIEW proving cash correcting entry page 108


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