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Accounting basic


Accounting basic is all start accounting and use to business.

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									                            Accounting Basic

                       General Journal Entries

After a transaction occurs and a source document is generated, the transaction is
analyzed and entries are made in the general journal. A journal is a
chronological listing of the firm's transactions, including the amounts, accounts
that are affected, and in which direction the accounts are affected. A journal
entry takes the following format:

                       Format of a General Journal Entry

                   Date Accounts                   Debit Credit
                   mm/dd account to be debited     xxxx.xx
                            account to be credited         xxxx.xx

In addition to this information, a journal entry may include a short notation that
describes the transaction. There also may be a column for a reference number
so that the transaction can be tracked through the accounting system.

The above format shows the journal entry for a single transaction. Additional
transactions would be recorded in the same format directly below the first one,
resulting in a time-ordered record. The journal format provides the benefit that all
of the transactions are listed in chronological order, and all parts (debits and
credits) of each transaction are listed together.

Because the journal is where the information from the source document first
enters the acco

Compound Journal Entries

The format shown above has a single entry for the debit and a single entry for the
credit. This type of entry is known as a simple journal entry. Sometimes, more
than two accounts are affected by a transaction so more than two lines are
required. Such a journal entry is know as a compound journal entry and takes
the following format:

                Format of a Compound General Journal Entry
                   Date Accounts                   Debit Credit
                   mm/dd account to be debited     xxxx.xx
                            account to be credited         xxxx.xx
                            account to be credited         xxxx.xx

For example, if an expense is incurred in which part of the expense is paid with
cash and the remainder placed in accounts payable, then two lines would be
used for the credit - one for the cash portion and one for the accounts payable
portion. The total of the two credits must be equal to the debit amount.

As many accounts as are necessary can be used in this manner, and multiple
accounts also can be used for the debit side if needed.

Special Journals

The general journal is the main journal for a wide range of transactions. Of these,
a business usually finds itself performing some types much more frequently than
others. By grouping specific types of transactions into their own special journal,
the efficiency and organization of the accounting system can be improved.

Some commonly-used special journals:

      sales journal
      purchases journal
      cash receipts journal
      cash disbursements journal

While a special journal may be organized differently from the general journal, it
still provides the core transaction information such as date, debits and credits,
and the relevant accounts.

From Journal Entry to Ledger Posting

Once the source document is generated and the appropriate journal entry is
made, the next step in the accounting cycle is to post the entry to the general

unting system, it is known as the book of original entry.

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