Lesson 1-4 Preparing a Chart of Accounts 2/24/2017 LESSON 4-1 Preparing a Chart of Accounts

TERMS REVIEW ledger general ledger account number file maintenance Lesson 1-4 2/24/2017 TERMS REVIEW page 95 ledger general ledger account number file maintenance opening an account Ledger: A group of accounts General Ledger: A ledger that contains all accounts needed to prepare financial statements Account Title: The name given to an account Account number: The number assigned to an account File Maintenance: The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current. Opening an Account: Writing an account title and number on the heading of an account LESSON 4-1

RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM Lesson 1-4 2/24/2017 RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91 It would be nearly impossible to accurately determine the balances of accounts if businesses only kept a journal. Instead, we create a place for each account to have a running total—a ledger. Each account listed in the chart of accounts has an account form that has columns that look like our t-accounts (from ch 2). We keep a running total in our ledger by adding “balance columns” for each account. We should see a number in the “normal balance” side of each account (the side that increases) This is called a “balance-ruled account form”. Balance columns LESSON 4-1

CHART OF ACCOUNTS page 92 LESSON 4-1 Lesson 1-4 2/24/2017 Here is TechKnow’s chart of accounts. Notice the five divisions. This business uses a 3-digit sequenced system. LESSON 4-1

ACCOUNT NUMBERS page 92 LESSON 4-1 Lesson 1-4 2/24/2017 Each account in a division starts with the same initial digit (Assets—1, Liabilities—2, Owner’s Equity—3, Revenue—4, Expenses—5 Each account is numbered by tens by certain rules. Assets: in order of liquidity, Liabilities, apha, OE, C, D, IS, Revenue: Sales Expenses, alpha LESSON 4-1

OPENING AN ACCOUNT IN A GENERAL LEDGER Lesson 1-4 2/24/2017 OPENING AN ACCOUNT IN A GENERAL LEDGER page 94 1 2 To “open an account”, write the account’s name (on the left side) on the top of the balance-ruled ledger account; write the corresponding number on the right side (consult the chart) 1. Write the account title. 2. Write the account number. LESSON 4-1

Exercises to learn to create a chart of accounts Lesson 1-4 2/24/2017 Exercises to learn to create a chart of accounts Work Together: text p 95, wp 57 OYO: text p 95, wp 58 LESSON 4-1

Lesson 1-4 Posting Separate Amounts from a Journal to a General Ledger 2/24/2017 LESSON 4-2 Posting Separate Amounts from a Journal to a General Ledger

Lesson 1-4 2/24/2017 TERM REVIEW page 99 Posting—transferring information from a journal entry to a ledger account Cross-reference: having information documented in two places to be able to check for accuracy LESSON 4-1

POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMN Lesson 1-4 2/24/2017 POSTING AN AMOUNT FROM A GENERAL DEBIT COLUMN page 96 2 1 3 5 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the debit amount. LESSON 4-1

POSTING A SECOND AMOUNT TO AN ACCOUNT Lesson 1-4 2/24/2017 POSTING A SECOND AMOUNT TO AN ACCOUNT page 97 2 1 3 5 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the debit amount. LESSON 4-1

POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMN Lesson 1-4 2/24/2017 POSTING AN AMOUNT FROM A GENERAL CREDIT COLUMN page 98 2 1 5 3 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the credit amount. LESSON 4-1

Exercises for posting separate amounts Lesson 1-4 2/24/2017 Exercises for posting separate amounts Work together 4-2: Text: p 99, wp 59-61 OYO 4-2: Text: p 99, wp 62-64 LESSON 4-1

Lesson 1-4 Posting Column Totals from a Journal to a General Ledger 2/24/2017 LESSON 4-3 Posting Column Totals from a Journal to a General Ledger

CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED Lesson 1-4 2/24/2017 CHECK MARKS SHOW THAT AMOUNTS ARE NOT POSTED page 100 Check mark indicates that amounts ARE NOT posted individually. Check mark indicates that general amount column totals ARE NOT posted. LESSON 4-1

POSTING THE TOTAL OF THE SALES CREDIT COLUMN Lesson 1-4 2/24/2017 POSTING THE TOTAL OF THE SALES CREDIT COLUMN page 101 2 3 1 5 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

POSTING THE TOTAL OF THE CASH DEBIT COLUMN Lesson 1-4 2/24/2017 POSTING THE TOTAL OF THE CASH DEBIT COLUMN page 102 2 3 1 5 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

POSTING THE TOTAL OF THE CASH CREDIT COLUMN Lesson 1-4 2/24/2017 POSTING THE TOTAL OF THE CASH CREDIT COLUMN page 103 3 2 1 5 4 1. Write the date. 4. Write the new account balance. 2. Write the journal page number. 5. Return to the journal and write the account number. 3. Write the column total. LESSON 4-1

JOURNAL PAGE WITH POSTING COMPLETED Lesson 1-4 2/24/2017 JOURNAL PAGE WITH POSTING COMPLETED page 105 LESSON 4-1

Exercises for Posting column totals Lesson 1-4 2/24/2017 Exercises for Posting column totals Work Together 4-3: Text: p 104, wp 59-61 OYO 4-3: Text: p 104, wp 62-64 Application problem 4-2 & 4-3 Text: 111, wp 68-70 LESSON 4-1

Lesson 1-4 Completed Accounting Forms and Making Correcting Entries 2/24/2017 LESSON 4-4 Completed Accounting Forms and Making Correcting Entries

TERM REVIEW correcting entry: Lesson 1-4 2/24/2017 TERM REVIEW page 109 correcting entry: a journal entry made to correct an error in the ledger LESSON 4-1

MEMORANDUM FOR A CORRECTING ENTRY Lesson 1-4 2/24/2017 MEMORANDUM FOR A CORRECTING ENTRY page 108 LESSON 4-1

JOURNAL ENTRY TO RECORD A CORRECTING ENTRY Lesson 1-4 2/24/2017 JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 108 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, $140.00. Memorandum No. 15. 1 Date 2 Debit 4 Source Document 3 Credit LESSON 4-1

Chapter 4 Assignments Chapter 4 Study Guide Lesson 1-4 2/24/2017 Chapter 4 Assignments Chapter 4 Study Guide Chapter 4 Application problem 4-1 (similar to test item) Chapter 4 Mastery Problem Extra Credit: Chapter 4 Challenge Problem Test on Chapter 4 LESSON 4-1