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Chapter 2 (Theoretical)

This document discusses the accounting recording process. It defines an account as an individual record of increases and decreases in assets, liabilities, or equity. It explains debits and credits, including how different types of accounts are either debited or credited. The recording process involves initially recording transactions in the journal, then posting them to individual accounts in the ledger. A trial balance is then prepared to prove the equality of total debits and credits.

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Sabbir Hossain
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16 views10 pages

Chapter 2 (Theoretical)

This document discusses the accounting recording process. It defines an account as an individual record of increases and decreases in assets, liabilities, or equity. It explains debits and credits, including how different types of accounts are either debited or credited. The recording process involves initially recording transactions in the journal, then posting them to individual accounts in the ledger. A trial balance is then prepared to prove the equality of total debits and credits.

Uploaded by

Sabbir Hossain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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:: CHAPTER 2 ::

THE RECORDING PROCESS


--- LAMIA ALAM
TOPICS TO BE DISCUSSED

1. What is an Account?
2. Debits and Credits
3. Debit and Credit Procedure
4. Steps in a recording process
5. Journal, Ledger and Trial Balance
WHAT IS AN ACCOUNT?

An account is an individual accounting record of


increases and decreases in a specific asset, liability,
or owner’s equity item. An account has three parts:
Left Side
(Debit)
T - ACCOUNT

Title of the account


DR. CR.

Left Side Right Side


DEBIT AND CREDIT PROCEDURE

Owner’s Owner’s
Assets Liabilities Revenues Expenses
Capital Drawing

DR. CR. CR. DR. CR. DR.

CR. DR. DR. CR. DR. CR.


STEPS IN A RECORDING PROCESS
JOURNAL, LEDGER AND TRIAL BALANCE
The Journal
Companies initially record transactions in chronological order (the order in which they
occur). Thus, the journal is referred to as the book of original entry. For each
transaction, the journal shows the debit and credit effects on specific accounts.
It discloses in one place the complete
effects of a transaction.

It provides a chronological record of


transactions.

It helps to prevent or locate errors


because the debit and credit amounts for
each entry can be easily compared.
JOURNAL, LEDGER AND TRIAL BALANCE
The Ledger
The entire group of accounts maintained by a company is the ledger. The ledger
provides the balance in each of the accounts as well as keeps track of changes in these
balances.
JOURNAL, LEDGER AND TRIAL BALANCE
The Trial Balance
The trial balance proves the mathematical equality of debits and credits after posting.
Under the double-entry system, this equality occurs when the sum of the debit account
balances equals the sum of the credit account balances.
The steps for preparing a trial balance are:.
List the account titles and their balances
in the appropriate debit or credit column.

Total the debit and credit columns.

Verify the equality of the two columns.


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