1. The Accounting Cycle

2. What we know so far… So far we know how to:
Identify and differentiate balance sheet and income statement accounts
Manipulating transactions
Create a general ledger using T accounts
Create financial Statements
But there are a few other steps in the accounting cycle that we must cover

3. The Cycle
Business Transactions Journalizing Beginning of Period Journal posting Financial Statements Ledger Statement Trial Balance Prep.

4. The Journal
A CHRONOLOGICAL Record of all parts of a transaction in one document.
Features the date, debit, credit and most importantly, an explanation of each transaction
The main journal of a business is referred to as the General Journal

5. Journalizing
This is the process of entering transactions into a journal.
Similar to entering transactions into a general ledger.

6. Better than T-accounts!
Using a general journal has all the benefits of T-account ledgers but is FAR more organized.
Cash Sales
Oct Oct

7. Using a Journal GENERAL JOURNAL Date Particulars PR Debit Credit 20--
Oct  1
Cash 9  00
  Sales 0 
 Sold services to R. Heinz for cash

8. Steps to Journalizing
Record the date – First entry must show the Year, Month and day. For all other entries only the day of the month needs to be recorded
Record the debit
Record the credit
Record the explanation

9. Your Homework Pg. 114 questions 1-8
Pg. 115 questions 1-3 – Use your workbook

10. And remember….

11. Where to go after the Journal
Posting to the general Ledger is different than when we post to the journal.
As we know, the general journal is where transactions are first recorded.
After this, the transactions must be broken out into their separate accounts in the ledger.

12. Balance-Column form
The Journal entries are broken out into what is called the Balance Column Form of Ledger.
Basically, it looks similar to the general journal, but with a column added onto it.
The third column is to keep a running total of a specific account.

13. Looks a little like this
Account Cash No. 100
Date
Particulars
P.R.
Debit
Credit
DR. CR.
Balance
DR.

14. Posting to the Ledger There are Six steps to remember:
Locate the account in the Journal. Cash, Accounts receivable etc.
Record the Date. Month and year need not be included, if they are already at the top.
Enter the amount

15. Posting steps continued
Calculate the new balance in the “Balance” Column

16. Last steps
Complete the Ledger posting Reference Column. This is literally the Journal page number. So if the transaction is recorded on the 10th page of the journal, you’d fill in J10 into this column.
Complete the journal posting Reference column.