Chapter 5 Journalizing

Transactions
 Definitions:
– Journal-A form for recording transactions in
chronological order.(A book of original entry)
– Journalizing-Recording transactions in a
journal.
– Special Amount Columns-A journal amount
column headed with an account title.
Definitions Continued
– General Amount Column-A journal amount
column that is not headed with an account title.
– Entry-Information for each transaction recorded
in a journal.
– Double-Entry Accounting-The recording of
debit and credit parts of a transaction.
– Source Document-A business paper from which
information is obtained for a journal entry.
Definitions Continued
– Check-A business form ordering a bank to pay
cash from a bank account.
– Receipt-A business form giving written
acknowledgment for cash received.
– Memorandum-A form on which a brief
message is written describing a transaction.
– Proving Cash-Determining that the amount of
cash agrees with the accounting records.
Chapter Highlights
 Four parts of an entry
– Date
– Debit
– Credit
– Source Document
– Before a transaction is
recorded in a journal, it
must be analyzed into
its debit and credit
parts.
 The terms Debit and
Credit are abbreviated
at dr and cr. These are
derived from Latin
and Italian words
debere and credere.
Ledgers with debit and
credit sides became
popular in the 17th
century in Europe
Proving a Journal Page
 Proving is showing  Proving has 3 steps
that total debits = total – 1.Add each of the
credits. amount columns.
– 2.Add the debit column
totals, and then ad the
credit column totals.
– 3.Verify that debits =
credits
Ruling
 Rule a single line  Write words carried
across all amount forward if bringing
columns directly totals to the top of the
below the last entry to next page if final totals
indicate that the enter the word
columns are to be “totals”.
added. Also place a check
 On the next line write mark in the post
the date in the date reference column(PR)
column.
Rulings Continued
 On the top of the new  Rule double lines
page if not final totals blow the column totals
write Brought Forward across all amount
in the Account Title columns. The double
Column and place a lines mean that the
check mark in the PR totals have been
column. verified.
 Write each column
total below the single
ruled line.
Prove Cash
 1-Cash Balance on  3-Subtract cash paid
hand at beginning of out during the fiscal
fiscal period period(Usually the
 2Add the cash cash credit total)
received during the  4-Equal the cash on
fiscal period(This is hand at the end of the
usually the cash debit fiscal period.
total)  5-Verify that the cash
balance = the
checkbook balance.
General Accounting Practices
 Errors are corrected in a way that does not
cause doubts about whether the information
is correct. Draw a neat line through an error
and write the correction above the cancelled
item.
 Words in accounting record are written in
full when space permits. All items need to
be legible. Only abbreviate when space is
limited.
Practices Continued
 Dollars and cents signs and decimal points
are not used when writing amount on ruled
account paper.
 Two zeros are written in the cents column
when an amount is in even dollars otherwise
doubts may arise as to amounts.
Practices Continued
 A single ruled line indicates addition or
subtraction.
 A double ruled line indicates totals are
verified and correct.
 Neatness is important and rulers should be
used to make rulings.