1.2.1 A book in which business transactions are recorded as they
happen. Both the debits and the credits of the entire transaction
are recorded in one place. The journal is a diary for the business
in which you record in day-by-day or chronological order all the
events involving financial affairs. A transaction is always recorded
first in the journal. In the general journal you must enter the
account to be debited and the account to be credited and the
126.96.36.199 Once a transaction is recorded in the general journal, the amounts are then posted to the
appropriate accounts. Accounts (such as Cash, Accounts Receivable, Equipment, Accumulated
Depreciation, Accounts Payable, Sales, Telephone Expense, etc.) are contained in the general ledger.
1.3 3) Record to general / subsidiary ledgers
The general ledger is, in essence, another notebook that contains a page for each and every account in use by a company. Examples would include:
*Payable Advertising *Expense Land Capital *Stock Utilities ExpenseThe general ledger will include a separate page for each of these nine accounts.
1.3.2 T-accounts display the balances in each account. Each journal entry is
transferred from the general journal to the corresponding T-account.
A useful tool for demonstrating certain transactions and events is the T-account. Importantly, one would not use T-accounts for actually maintaining the accounts of a business. Instead, they are just a quick and simple way to figure out how a small number of transactions and events will impact a company.
The cash flow statement is a snapshot of a firm's financial resources and obligations at a single point in time, and the income statement summarizes a firm's financial transactions over an interval of time.