CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 4-1

How do you prepare a chart of accounts?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-1

RELATIONSHIP OF A T ACCOUNT TO AN ACCOUNT FORM page 91

Balance columns

Balance-ruled account form

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

CHART OF ACCOUNTS

Ledger – group of accounts General ledger – ledger that contains all accounts

needed to prepare financial statements Account title – name given to an account Account number – number assigned to an account Chart of accounts – list of account titles and numbers

showing the location of each account in a ledger

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LESSON 4-1

page 92

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-1

ACCOUNT NUMBERS page 92

File maintenance – procedure for arranging accounts in a general ledger, assigning account number, and keeping records current

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-1

CHART OF ACCOUNTS page 92

-Expenses – alphabetical order-Assets – order of liquidity

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

Assigning account numbers

TechKnow Consulting initially assigns numbers by 10’s, so new accounts can be added easily

Unused account numbers are assigned to new accounts See example in book – page 93

When an account is no longer needed, it is removed from the general ledger and chart of accounts Example – if TechKnow Consulting were to buy a building, there

would no longer be a need for the Rent Expense acct.

When a new account is added at the end of a ledger division, the next number in a sequence of 10’s is used Example – Water expense…570

As the number of general ledger accounts increases, a business may use four or more digits for account numbers

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LESSON 4-1

page 92

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-1

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.

OPENING AN ACCOUNT IN A GENERAL LEDGER page 94

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-1

TERMS REVIEW

ledger general ledger account number file maintenance opening an account

page 95

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 4-2

How do you post from a General Journal to a General Ledger? Posting – transferring information from a journal entry to a

ledger account

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

1. Write the date. 4. Write the new account balance.

2. Write the journal page number.

3. Write the debit amount.

5. Return to the journal and write the account number.

POSTING AN AMOUNT FROM THE DEBIT COLUMN OF A GENERAL JOURNAL page 96

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

POSTING AN AMOUNT FROM THE CREDIT COLUMN OF A GENERAL JOURNAL page 97

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1. Write the date. 4. Write the new account balance.

2. Write the journal page number.

3. Write the credit amount.

5. Return to the journal and write the account number.

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3

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A DEBIT BALANCE page 98

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4

1. Write the date. 4. Write the new account balance.

2. Write the journal page number.

3. Write the debit amount.

5. Return to the journal and write the account number.

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

POSTING A DEBIT AMOUNT TO AN ACCOUNT WITH A CREDIT BALANCE page 99

1. Write the date. 4. Write the new account balance.

2. Write the journal page number.

3. Write the debit amount.

5. Return to the journal and write the account number.

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CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

JOURNAL PAGE WITH POSTING COMPLETED

(continued on next slide)

page 100

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

JOURNAL PAGE WITH POSTING COMPLETED page 100

(continued from previous slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-2

TERM REVIEW

posting

page 101

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 4-3

How do you prove cash and make correcting entries?

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 102

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 103

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 103

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 104

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 104

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 105

(continued on next slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

GENERAL LEDGER WITH POSTING COMPLETED page 105

(continued from previous slide)

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

PROVING CASH page 106

Proving cash – determining that the amount of cash agrees with the balance of the cash account in the accounting records• Can be proved at any time but always at the end of a month• Compare the cash account balance to the amount shown in the checkbook

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

MEMORANDUM FOR A CORRECTING ENTRY page 106

Correcting entry – journal entry made to correct an error in the ledger• Necessary when an error made in the journal has already been

posted

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

November 13. Discovered that a payment of cash for advertising in October was journalized and posted in error as a debit to Miscellaneous Expense instead of Advertising Expense, $140.00. Memorandum No. 15.

JOURNAL ENTRY TO RECORD A CORRECTING ENTRY page 107

4 Source Document

3Credit

1 Date2 Debit

CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

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LESSON 4-3

TERMS REVIEW

proving cash correcting entry