LESSON 4-1

Preparing a Chart of Accounts

General Journal (Chapter 3)

• What does a General Journal accomplish in Accounting?

•  What is a General Journal?

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General Journal (Chapter 3)

• General Journal

• -Is a permanent record of the debit and credit parts of each transaction recorded in chronological order

• However, a journal does not show in one place all the changes in a single account

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RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM

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Balance columns

Chart of Accounts • A group of accounts is called a ledger.

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• A ledger contains all accounts needed to prepare financial statements is called a general ledger.

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• The name given to an account is known as an account title. The number assigned to an account is called an account number.

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CHART OF ACCOUNTS

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Account numbers150 Supplies

1-The first digit of each account number shows the general ledger division in which the account is located. Represents the general ledger (1’s are associated with the asset division)

50-The second digits indicate the location of each account within a general ledger division. The 50 in the account number for Supplies indicate that the account is located between account number 140 and 160.

(1) Assets (2) Liabilities (3) Owner’s Equity (4) Revenue (5) Expenses

(2) Balance Sheet Accounts-Assets, Liabilities, Owner’s Equity

(3) Income Statement Accounts-Revenue and Expenses

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ACCOUNT NUMBERS

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Assigning account numbers

TechKnow consulting assigned numbers by 10’s (Ex. 110-120-130). Numbers (111-119) are not used. New numbers can be assigned between existing accounts. The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current is called file maintenance.

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Opening an account in a general ledger

• Writing an account title and number on the heading of an account is called opening an account.

• A general ledger account is opened for each account listed on a chart of accounts.

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OPENING AN ACCOUNT IN A GENERAL LEDGER

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1. Write the account title after the word Account in the heading.

2. Write the account number after the words Account No. in the heading.

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TERMS REVIEW ledger

general ledger

account number

file maintenance

opening an account

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