Betty’s Bakery

Small Business Manual Accounting & Bookkeeping Practice Set

Step 3: The Six Journals - continued

Work to be Performed - continued

1. Enter the month (January) and year (20XX) at the top of each journal

2. Starting with Customer Sales Invoice source documents, enter one invoice per line: enter applicable source document information: date, reference number (invoice number, check number, etc.), and name

3. Also enter each source document’s dollar amounts as debit(s) on the left-side of the journal and credit(s) on the right-side of the journal Be sure the debit and credit dollar amounts are equal

4. After all transactions have been entered in the journal, add up each column and enter the totals at the bottom. It is important that these total debit and credit column amounts are also equal because they will be subsequently ‘posted’ (transferred) to the individual General Ledger accounts

5. Complete the remaining six journals using these same steps.

Step 4: The General Ledger Overview

The General Ledger is a central record-keeping system that contains all of the financial transactions of a company. It is a master accounting document that provides a complete and accurate record of all the financial transactions that have occurred during the life of the business An organization can have only one General Ledger.

The General Ledger contains all the individual accounts that a company uses to record its transactions in five categories: assets, liabilities, equity, revenue, and expenses. Each account in the GL has its own ledger page where transactions are recorded in chronological order using double-entry, debit and credit amounts. Each GL account will carry either a debit or credit balance and it is the accountant’s responsibility to know the validity and accuracy of each balance.

Work to be Performed

The General Ledger is located in Step 4: The General Ledger (4.1). The GL ledger pages should stay in the manual. Note that the GL account numbers and descriptions are identical to the Chart of Accounts